# Roundup of the week: 20 March 2026

_Twenty days into the Persian Gulf conflict, the media's "apocalypse" framing continues to overshoot reality — and both the Fed and the Bank of England held rates this week, though only one of those decisions was the right call. Neil Woodford explains why the MPC is making a mistake, why higher oil prices are deflationary in a weak economy, and what the first signs of diplomatic de-escalation might look like._

Neil Woodford · 20 March 2026 · 6 min read

![The Qatar Energy LNG facility at Ras Laffan after an Iranian missile attack this week.](https://cdn.sanity.io/images/v3acfbvo/production/c0ac8ca2d21822f4b6a77975fbafb36b53bab2d0-1200x800.jpg?w=1600&fit=max&auto=format)

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As I write this update the war in the Persian Gulf is ending its 20th day. In some ways it feels as if this conflict has been running for much longer given how it has dominated discourse in geopolitics. Every twist and turn in the war receives wall-to-wall coverage and naturally, dominates every financial market including equities, bonds, gold, bitcoin, and commodities, be they aluminium, naphtha, fertiliser and even helium. In all the heat and light surrounding the conflict it is difficult to understand the implications of each event, let alone their impact on its duration. In all the confusion, however, I still believe that the war will not turn into the type of protracted confrontation we have seen too often play out in the Middle East in the 70s, in the 90s following Iraq's invasion of Kuwait, and in the aftermath of the attack on the Twin Towers in 2001.

Just today there has been a further escalation which has completely undermined the three-day financial market rally that had preceded it. Following Israel's bombing of the onshore processing facilities of Iran's South Pars gas field, Iran then launched an attack on Qatar's Ras Laffan Industrial City which processes and liquifies gas from the same field which it shares with Iran, and which, in normal times, is exported as LNG across the world. These exports account for about 20% of global LNG supply in normal times. (Since the war started these exports have halted.)

Iran apparently launched six missiles at the facility, which is apparently three times the size of Paris. Five were intercepted but one did hit. This strike has caused considerable damage which may take some years to repair. According to the Qatar government, about 17% of the total capacity of the facility is now out of action (or just under 3.5% of total global LNG capacity). Ras Laffan has 14 gas liquefaction units and was planning 6 more to come on stream over this year and next. That expansion has now been delayed by some "months".

I mention this only because once again, in customary fashion, some in the media have portrayed this attack as having destroyed Qatar's LNG infrastructure and one report I heard claimed it would take five years to rebuild. As serious as this attack is, this interpretation is a wild exaggeration of the truth. Albeit that Iran might launch further attacks, given that they have been targeting oil and gas infrastructure across the region in Bahrain, Qatar, Kuwait, the UAE and in Saudi since the war began, the "armageddon" or "apocalypse" that some have described this as seems to me to be a wild exaggeration of what has actually happened. Indeed, a more balanced interpretation of this escalation might explain why Wall Street, which once again appears to be the only grown-up in the room, is only down just over 0.5% (S&P 500) whilst the Nikkei was down 3.4% and the FTSE 100 down 2.4%.

This calm and considered reaction may also reflect the fact that the US economy enjoys energy self-sufficiency, a position that the UK could be enjoying in a parallel universe in which its energy policy had been designed to benefit the environment, its citizens and its industry. This is a subject I will return to in next week's Noise Cancelling podcast but for now, will focus on the rest of the news.

## Fed interest rate decision

On Wednesday the Fed announced that it would be holding interest rates. Fed Chair Powell said that he expected the war to drive inflation up, but added, critically, that it was too soon to know what the scope and duration of higher energy prices would be. Having said that, the Fed committee, via its dot plots, communicated that it expected to make one more quarter-point cut in rates in 2026, in line with its guidance from December. Given that the economy is growing at about 2%, inflation is at 3% and unemployment is at 4.4%, this all seems to me to be eminently sensible. Arguably, right now, the US economy looks like it doesn't need lower rates. Holding them steady given conditions in the economy seems like the right move to me.

## MPC rate decision

In the UK on Thursday, the ONS released important employment data, and the Bank of England announced its interest rate decision. The labour market data once again showed a glaring contradiction between the LFS and HMRC series, with the former showing more people in work and the latter pretty much showing no change. Unemployment is at 5.2%, which compares with 4.4% a year earlier. (The unemployment rate for 18–24-year-olds was a concerning 14.5%, up 1.6% in a year.) Overall levels of inactivity were down which is encouraging but long-term sickness remains elevated. Vacancies, which fell a lot in 2024 and in the first half of last year, were unchanged on the levels seen at the end of 2025. Perhaps most encouraging for the rate-setting committee is the fact that private sector wage growth is settling at 3%, which compares with 6% for the same group a year ago.

As for interest rates, as expected, the MPC decided to hold interest rates at 3.75%. The committee voted 9-0 for no change. As much as this was expected and most observers would opine that this is clearly the right decision given the current uncertainties in the energy market, I have to say that I think it's the wrong decision, again.

In this week's Noise Cancelling podcast I explain why and I won't repeat all the arguments here but in summary, the underlying weakness of the UK labour market and the flat-lining economy illustrate that the economy urgently needs monetary policy stimulus to offset the fiscal tightening that this government has imposed on businesses and consumers and will continue to do so. The circumstances in which higher oil prices might lead to second-round effects that lead to sustained higher inflation (companies raise prices to protect margins and workers demand higher wages to compensate for higher energy costs) are just not present here in the UK. Unemployment is at a five-year high at 5.2%, the economy has been flat-lining for about nine months, and in these circumstances, higher oil prices will in effect act like an additional tax on consumers. In this situation, the medium-term effects of higher oil prices are deflationary, stripping demand out of the economy and further undermining the ability of the economy to deliver the growth outcomes we all so long for. It is these concerns which have presumably prompted the government to announce that if higher oil prices are sustained then it will intervene with measures to protect "working families". So, if higher energy prices are sustained, we will have the MPC raising rates to take money out of consumers' pockets whilst the government borrows more money to put it back in. Make sense of that if you can!

## What to look out for next week

I suspect, unsurprisingly, that the war will dominate the headlines once again next week. (Meanwhile, the other one in Ukraine barely gets a mention these days.) Having said that, my guess is that the intensity of the conflict will diminish next week and there may even be moves to de-escalate. This may sound fanciful but is consistent with some of the narrative that I hear from elements of the US political leadership. In breaking news, I have also just read a joint statement from the leaders of the UK, France, Germany, Italy, the Netherlands and Japan who apparently now stand ready to help efforts to secure safe passage of commercial vessels through the Strait of Hormuz. Maybe this is the first sign of co-ordinated attempts to de-escalate. We will see.

In the more mundane world of economic stats, once again it is a busy economic calendar next week on both sides of the Atlantic. Whether anyone will pay attention rather depends on what's happening in the Persian Gulf. As for company results, it is a lot quieter, thank goodness.