Chapter 1: What recent events have escalated tensions in the Strait of Hormuz?
Attacks on oil infrastructure are escalating. From Marketplace, I'm Sari Beneshour, in for David Brancaccio. Iran has ratcheted up its attacks on Gulf countries and in the Strait of Hormuz. Six more tankers have been hit. Reuters has some pretty insane video of tankers burning on the water. Iran's new supreme leader, in his first official message, says the Strait of Hormuz will stay closed.
Brent crude has hit $100 a barrel. Bradley Saunders is North America economist at Capital Economics and is here to talk about it. Hi, Bradley. Good morning. Oil prices are now headed back towards $100 a barrel. Does it feel like they are going to stay there for a while?
It's difficult to say at the moment. Obviously, there is so much uncertainty. We just have to take the conflict today as it comes. But I suppose the best way to think about this, the way we've been looking at it at Capital, is sort of sketching out three scenarios, really.
One being that, similar to the 12-day war last year, conflict quickly resolves and the oil price drops back towards $70 or $60 a barrel by the end of the year. The second scenario being that oil prices sort of stay around $100 for a few months as the conflict continues.
There's limited damage to energy infrastructure, and once resolve is reached of some kind, oil prices drop back later on in the year. And the third scenario where the conflict spirals, energy infrastructure is damaged to quite a degree, and the oil price remains around $120 to $150 a barrel throughout the year.
I mean, we have seen some infrastructure damage in both the Gulf countries as well as Iran. How bad is that?
I mean, a lot of energy infrastructure has been closed for the time being. So even if it's not directly struck, it's the case that it's still not producing or transporting anything. What's really key here is traffic through the Strait of Hormuz. About 20% of the world's oil passes through the Strait. And that's really what's critical to the direction the oil price goes in.
U.S. Treasury yields rose, meaning investors are less interested in them. That is a message.
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Chapter 2: How are rising oil prices affecting global markets?
You want to decode that for us?
So typically, what we would see in periods of geopolitical tension or stress in general is a flight to safety among investors. And the most safe asset of all has been the case for decades now is seen to be the 10-year period. US Treasury. Instead, we're seeing the opposite, where the yield is rising.
And I think that that is less driven by, as I say, a flight to safety you typically see, and more the case that it now looks increasingly unlikely that the Federal Reserve will lower interest rates by as much as investors had been expecting this year.
Countries have agreed to release 400 million barrels of oil from strategic reserves. Markets did not really respond very strongly to that. Why not?
These 400 million barrels, they're enough to fully offset the impact of lost supply due to the conflict, if the conflict were to end today. Now, if this conflict continues for another two to three weeks, already then, we're beyond the point which is being supplemented by the strategic reserves. I think it's best to think of these reserves as a cushion rather than a total offset during crises.
Bradley Saunders, North America economist at Capital Economics. Thank you so much. Thanks for having me. The number of independent restaurants in the U.S. dropped last year by 2.3 percent. The number of chain restaurants, though, rose 1.4 percent. This is according to preliminary data from Technomic.
From Nashville Public Radio, Mariana Bakayau reports that once those independent restaurants close, they are hard to replace.
Walking into Fido, you can't miss the giant countdown clock, measuring the time until the coffee shop closes in two years.
It felt good putting that up. Sad as it is, it was sweet.
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Chapter 3: What trends are impacting independent restaurants in the U.S.?
But Nashville's skyrocketing rent prices have forced his retirement. Rising prices are a problem all over the country, according to Technomic, a research and consulting firm for the restaurant industry. Vice President Rich Schenck says when chains move in, the city can lose its individual identity.
If they all look like here in Chicago, what's the special reason to go to Nashville versus Chicago or Tampa or wherever? Because the restaurants are the same and they look the same and they don't have the regional flavors and the personalities behind it to provide that unique culture.
Across the river, East Nashville is also losing some of that culture. A city staple, Margo Cafe, plans to say goodbye this June on the 25th anniversary of its first day. Margo McCormick, the owner of Margo Cafe, has a framed menu from that first night.
It's sort of an interesting time capsule. Like, look at the prices.
Chapter 4: How are rising costs affecting the survival of small eateries?
You can have pasta for $12, and you can have soup for $3, and a salad for $4.
McCormick has already cleared the biggest hurdle in this industry. She owns her building outright, but she still has to contend with rising prices.
Honestly, it's about the property taxes. It's about the credit card fees.
Chapter 5: What unique challenges do independent restaurants face compared to chains?
It's about the insurance going up 12%. So by the time you get down to the bottom line, there's like less and less there all the time.
For a business model that already has such thin margins, Technomics Shanks says most new restaurants won't last as long as McCormick's or Bernstein's. In Nashville, I'm Mariana Bacayau for Marketplace.
And in New York, I'm Sabree Beneshour with the Marketplace Morning Report.
Chapter 6: How does the closure of local restaurants impact community identity?
From APM American Public Media.