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Business Report Oct 26, 2026: US Oil Reserve Down a Third Since War

America’s emergency oil reserve is down about a third since the Iran war began as Brent holds near $116, the Fed meets and the deficit tops $1.99 trillion.

ByPeter
White crude oil storage tanks and a valve-lined pipeline manifold at dusk, refinery towers glowing behind them
AI-generated illustration

Good evening. This is the Peter’s World business report for Monday, October 26, 2026. Tonight, America’s emergency oil reserve keeps shrinking while Brent crude holds above $115, the Federal Reserve opens a meeting one week before the midterms with war-driven inflation on the table, Washington closes the books on a $2 trillion deficit, and Brazil’s election shock hits an oil giant and a jet maker.

Oil Holds Above $115 as the Emergency Reserve Drains

Brent crude futures settled at $115.81 a barrel on Monday, down 91 cents after briefly topping $117, and U.S. West Texas Intermediate fell $1.51 to $101.76, CNBC reported. Prices are still up about 12% this month. The dip came as Saudi Defense Minister Prince Khalid bin Salman held talks in Tehran with Iranian President Masoud Pezeshkian; our Iran war update covers that meeting.

The bigger story sits in government data. The Strategic Petroleum Reserve held 282.7 million barrels in the week ending October 16, according to the Energy Information Administration. In the last week of February, just before the war with Iran began on February 28, it held 415.4 million barrels. That is a drop of roughly a third, and CNBC noted the reserve now sits at its lowest level since 1982.

Washington is still tapping it for local emergencies. On Friday, the Energy Department authorized an exchange of up to 400,000 barrels from its West Hackberry site to the Phillips 66 refinery in Lake Charles, Louisiana, after a crude supply disruption there. The department said Phillips 66 must return more barrels than it borrows. A day earlier, it announced up to $150 million in Defense Production Act funding for refining, storage and logistics, citing a presidential determination that names domestic refining capacity as essential to national defense.

Drivers feel the same pressure. Regular gasoline averaged $4.28 a gallon nationwide on October 19, about $1.27 more than a year earlier, according to the EIA’s weekly fuel update.

Airlines are paying too. JetBlue reported a third-quarter net loss of $257 million, compared with $143 million a year ago, as its fuel bill rose 61% to $868 million, CNBC reported. Average fares climbed more than 19%, to $245.11. “Resilient demand and strong yields drove revenue well ahead of our initial expectations,” Chief Executive Joanna Geraghty said. The shares hit a new low on Monday, then jumped in after-hours trading.

Analysis: A smaller reserve means less cushion if the war hits supply again. Michael Alfaro, chief investment officer at Gallo Partners, told CNBC that geopolitical risk has already added roughly $20 a barrel, and that a substantial strike on Saudi Arabia’s East-West pipeline or its refineries could send prices sharply higher.

The Fed Meets With War Inflation on the Table

Those energy costs lead straight to the central bank. The Federal Open Market Committee meets Tuesday and Wednesday, October 27 and 28, according to the Federal Reserve’s calendar. Last month it raised its benchmark rate by a quarter point, to a range of 3.75% to 4%, its first increase since 2023. Annual consumer inflation reached 3.7% in September, and surging oil prices tied to the war helped push wholesale prices higher, CNBC reported.

Traders see little chance of another move this week. Fed funds futures priced in less than a 10% chance of a hike on Wednesday, but nearly 75% expect at least one more by year-end, according to the CME Group’s FedWatch tool, as cited by CNBC. “Inflation is still the No. 1 problem in the U.S. economy,” said Heather Long, chief economist at Navy Federal Credit Union, adding that “given that it’s right before an election, they won’t hike in October.”

A $2 Trillion Deficit Meets 5% Yields

Higher rates also raise Washington’s own borrowing bill. The federal government ended fiscal 2026 on September 30 with a deficit of $1.99 trillion, as outlays of $7.40 trillion outran receipts of $5.40 trillion, according to the Treasury’s Monthly Treasury Statement. CNBC calculated that the gap grew 12% from last year and equals roughly 6.2% of gross domestic product, well above Treasury Secretary Scott Bessent’s goal of a deficit below 4% of GDP by the end of President Trump’s term.

The bond market is charging more for that debt. The 10-year Treasury yield traded at 5.1% on Friday, up 1.14 percentage points since the end of February, CNBC reported. It pointed to the Iran war as one driver, since higher oil and diesel prices have bond traders demanding extra yield in case the Fed keeps hiking, and to heavy borrowing by companies building artificial intelligence infrastructure, which competes with the government for investors’ cash.

What it means: The war’s economic cost is no longer only at the pump. It now runs through inflation, interest rates and the federal interest bill, a chain that makes every month of disruption in the Gulf more expensive for taxpayers.

Brazil’s Election Shock Hits Petrobras and Embraer

Outside the United States, the largest market shock came from Latin America’s biggest economy. President Luiz Inácio Lula da Silva won a fourth term with 51.8% of valid votes to 48.2% for Senator Flávio Bolsonaro, according to Brazil’s Superior Electoral Court, as reported by CNBC. Markets were caught off guard, CNBC reported.

U.S.-listed shares of the state-controlled oil company Petrobras fell 16%, and Embraer, which builds both airliners and military aircraft, slipped 5%, CNBC reported. The iShares MSCI Brazil fund was 25% lower at 10:30 a.m. Eastern, and the real dropped 10.5% against the dollar, its weakest level since December 2025, according to LSEG data. Brazil’s Treasury canceled government bond auctions set for October 27 and October 29. Citi analysts said investors were worried about “fiscal policy, state-owned enterprises, and the broader reform agenda.” Our Americas security update has more on the vote.

Wall Street Bets on the AI Build-Out

Back in New York, stocks started the week higher. The Dow Jones Industrial Average gained 146.42 points, or 0.3%, the S&P 500 rose 0.7% and the Nasdaq Composite added 0.8%, CNBC reported, as technology shares outperformed and the AI trade got a lift from Anthropic’s filing to go public.

In its filing with the Securities and Exchange Commission, the maker of the Claude models said it plans to list on the Nasdaq under the ticker “ANT.” CNBC noted that the company has had two high-profile disputes with the U.S. government in recent months, and that the filing flags a risk of “material revenue losses” from Trump administration actions. Separately, Meta said it plans to raise $95 billion for AI infrastructure, starting with $35 billion in underwritten stock offerings, and that Nvidia, AMD and Broadcom were interested in buying up to $5 billion of the shares.

The build-out has a physical and political cost. The American Prospect reported from New Albany, Ohio, where Meta, Amazon and Microsoft data centers now surround homes, that the state’s sales-tax break for data centers cost Ohio $1.5 billion in 2025, 11 times the tax department’s forecast. Governor Mike DeWine paused new exemptions in May, and the Prospect cited polls showing more than 70% of Ohioans oppose data centers in their own communities.

What to Watch Tuesday

Boeing, a major defense contractor as well as a jet maker, reports third-quarter results on Tuesday, along with Coca-Cola and Robinhood, CNBC reported. Traders will also get durable goods orders, consumer confidence and new home sales as the Fed’s meeting begins. Microsoft, Alphabet and Amazon report later in the week. For the trade side of the story, see our trade war update on the U.S.-Canada steel and auto talks.

That wraps up tonight’s look at the money behind the headlines. Thanks for listening.

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