Bank of America CEO Brian Moynihan feels higher oil prices are becoming a headache for the economy, but isn’t ready to call out a full-blown crisis as yet.In a recent Fox News special, Moynihan argued that an extended conflict will likely choke off petroleum-dependent products, making inflation harder to control.The latest move on the Iran conflict is towards a fresh round of ceasefire talks in Pakistan, but the outlook remains shaky.Moreover, the ceasefire is expected to wrap up late Wednesday, and the U.S. continues to block Iranian ports, with Iran reimposing its closure of the Strait of Hormuz after briefly lifting it. Consequently, oil prices have risen over the past three trading days.Early Tuesday, Brent traded around $94.94, and WTI around $88.50.Compared to April 17, Brent has climbed roughly $4.56, or 5%, over that period, while WTI is up about $4.65, or 5.5%. Surprisingly, Moynihan’s warning comes amidst a relatively steady near-term outlook.BofA economists still expect the U.S. economy to grow 2.1% this year, even after slashing their forecast by half a point due to the war and elevated energy costs. In fact, Moynihan admitted that inflation will most likely run hotter as oil and gas prices feed into a wider range of goods and services.Nevertheless, the economy isn’t rolling over at this point. According to Moynihan, BofA customers spent 5% more in Q1 than they did a year prior, and both the average consumer and commercial clients remain in good shape. So, Moynihan’s call is essentially a warning that if we continue to see the conflict drag on, it could be a far bigger problem than it is now.
Brian Moynihan, chief executive officer of Bank of America Corp., during a Bloomberg Television interview in London, UK, on Friday, Dec. 5, 2025. The UK needs to ensure its get regulations right, Moynihan said. Photographer: Chris J. Ratcliffe/Bloomberg via Getty ImagesChris J. Ratcliffe/Bloomberg via Getty Images
The economy looks steady, but oil is the wild cardMoynihan’s argument is straightforward in that expensive oil becomes a major issue in a protracted conflict, as it’s usually the first domino to fall in a bigger supply-chain problem.More Federal Reserve:Fidelity delivers sobering interest-rate message amid Fed pauseJ.P. Morgan pushes back on Fed’s 2026 rate-cut forecastGlobal central banks signal shocking shift on interest-rate betsMoynihan specifically talked about the downstream effect, especially on things like clothing, the plastics, the aluminum, the inputs that come out,” a far bigger economic issue than a short-term increase in gasoline. So even if consumers can live off pricier fuel, businesses might have a tough time absorbing the higher input costs on the back of lingering supply chain disruptions. On top of that, he also cautioned about there being “a lingering effect of prices” as restoring oil and gas supply chains while repairing damaged facilities would take some time.At the same time, Moynihan says the economy has held up well as far as the numbers suggest.Related: Goldman Sachs drops cautious signal for Fed rate cuts in 2026He argued that consumers “spent 5 percent more money” in Q1 and stressed they are spending in ways “consistent with them being employed, earning more money.”Moynihan added, “The world is adjusted to $100 oil. The biggest risk is if it goes on too long, will the availability of petroleum-related products really be constrained?”That is at the core of the argument: the economy can handle higher oil better than it can a prolonged supply-related shock. Where the Iran/oil shock is already showing upInflation has already taken a hit.March CPI numbers showed a 0.9% sequential increase, led by a 10.9% rise in energy costs, while gasoline surged 21.2%.
In fact, gasoline alone accounted for the lion’s share of the bump at nearly three-quarters of the monthly increase.
Soft data and business surveys are flashing stress. The University of Michigan’s preliminary April consumer sentiment reading tanked to a record-low 47.6, while one-year inflation expectations shot up to a worrying 4.8% from 3.8%.
Similarly, on the business end, ISM’s March manufacturing prices index jumped to 78.3, while services prices paid rose to 70.7, with higher fuel costs and supply disruptions cited as the main culprits behind the weaker sentiment.
Consumer spending is holding up. Nevertheless, February retail sales rose 0.6% month over month and 3.7% year over year. At the same time, Wells Fargo CEO Charlie Scharf said spending is still running 5% to 7% above last year’s levels, despite market headwinds. Big banks just turned in a strong quarterBank of America Q1 sales came in at $30.3 billion and EPS at $1.11, up 7% and 25% year over year, respectively. It beat EPS estimates by 10 cents, topping sales forecasts by about $0.38 billion.Goldman Sachs also reported Q1 earnings, with sales of $17.23 billion and EPS of $17.55, up 14% and about 24%, respectively, year over year. It sped past EPS estimates by $1.06, while revenue came in about 1.5% above forecasts.Wells Fargo was a lot more mixed, but still not weak. Revenue jumped to $21.45 billion, and EPS climbed to $1.60, up 6% and 15% year over year. EPS beat by 2 cents, though revenue missed by roughly $0.35 billion.FactSetreads the numbers up, with Financials the biggest positive earnings mover since March 31. Consequently, sector earnings growth was revised up to 19.7% from 15% and revenue growth to 10.8% from 10%.Related: Bank of America resets Microsoft stock forecast ahead of earnings