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Engineer Alexey Grigorev was using Claude Code—a popular Anthropic tool that helps developers write and run code—to update a new website. 

At first everything seemed normal, until he realized the system had begun destroying the site’s live environment: the network, services and, most critically, the database holding years of course data. 

The root cause was a small setup mistake on a new laptop that confused the automation about what was “real” and what was safe to delete, so it erased the actual production system instead of just cleaning up duplicates. 

While Grigorev eventually managed to restore his data with help from AWS support, he later wrote that he had “over‑relied on the AI agent” and, by letting it make and execute the changes end‑to‑end, had removed safety checks that should have prevented the deletion.

“AI assistants are great and saving a lot of time,” Grigorev told Fortune. “But I hope people learn from mistakes I made and incorporate the safeguards into their workflow.”

Anthropic’s Claude Code has settings that give a user control over when and how often the agent checks back with the user before taking actions. A user can specify that the agent should not take certain actions without asking for permission from the user. But some coders prefer to let the AI agent execute more decisions autonomously, in part because it saves time. As of press time, Anthropic had not responded to a request to comment for this story.

Even as AI coding tools promise faster development and automation, mistakes in AI-generated code are common and risk bringing down critical systems, wiping out years of work, and creating unexpected costs. Last week, Amazon convened a “deep dive” meeting after a series of outages affected its website and app. At least one of the system failures was, according to news reports in several publications, involved AI-assisted changes.

A spokesperson for Amazon told Fortune that the meeting was a “regular weekly operations meeting.” The company has also said publicly that only one of the incidents involved AI, and “the cause was unrelated to AI and instead our systems allowed an engineering team user error to have broader impact than it should have.”

However, internal Amazon documents viewed by both CNBC and the Financial Times, originally cited “Gen-AI assisted changes” as a factor in a “trend of incidents.” The reference to AI’s role in the outages was later deleted from the document ahead of the meeting, CNBC reported. According to the Financial Times, a December outage at Amazon Web Services occurred after engineers allowed Amazon’s own Kiro AI coding tool to make changes—something Amazon has since said was a “user error.”

The excitement around AI-assisted software development has reached a fever-pitch over the last few months, but the errors are starting to pile up. Companies, emboldened by advances in AI coding agents and stories of dramatic productivity gains within AI labs, have started pushing engineers to produce more and more code with AI tools, often without proper oversight in place. For large enterprises, the poor quality of some of this code may prove to be AI’s Achilles heel.

An over-reliance on AI tools

Across the industry, engineers say that reliance on AI assistants to write and deploy code is rapidly changing the nature of software development jobs—and introducing new risks.

“People are becoming so reliant on AI that essentially they stop reviewing the code altogether,” one Amazon engineer, who asked to remain anonymous, told Fortune.

The developer said that even technically skilled staff are moving into more of a “review role” rather than actively coding, with AI handling much of the actual implementation. While these tools allow for faster feature delivery, they also create what some call “production noise,” code that is delivered quickly but isn’t always needed or fully tested. In some cases, it could even affect critical systems.

David Loker, VP of AI at CodeRabbit, said the consequences aren’t always as visible as an outage. In one instance, he said an AI assistant generated code that looked perfectly valid but was built on faulty assumptions about their underlying system—code that might have passed a quick review but would have crashed their database in production if they’d rolled it out.

“If you just rolled that out, it would have taken down our database in production,” he said.

Because AI coding lowers the technical knowledge needed to perform certain software development tasks, engineers say companies are also outsourcing tasks normally done by senior engineers to junior or less technical staff, only to find that low-quality output creates more work than it saves. 

“A lot of what was built was fairly bad quality, broke often, and ended up being more of a burden,” one London-based engineer at an enterprise software company, who asked to remain anonymous because they were not authorized to discuss company matters with the press, said. “The time won by getting the cheap people to write it is offset by having someone paid far more—a senior or principal—to have to go fix it when it breaks.”

Broader data suggests the burden of reviewing and repairing AI-assisted work is falling disproportionately on more experienced engineers. While senior engineers have the skills to spot a logistical error or security flaw that a junior might miss, allowing them to ship faster, they’re also paying a growing “correction tax.”

A July 2025 Fastly survey found that senior engineers ship nearly 2.5x more AI-generated code than junior ones, because they’re better at catching mistakes before they compound. But nearly 30% of seniors said fixing AI output ate up most of the time they’d saved, compared to 17% of junior developers. Junior developers often feel like they’ve banked bigger productivity gains because they don’t yet see the full technical debt or latent vulnerabilities that their AI-assisted changes are quietly adding to the system.

The productivity paradox 

Part of the problem is C-Suite FOMO. Engineers at leading AI labs have been claiming productivity surges that would have seemed implausible just a few years ago, and larger organizations across a variety of industries want to encourage similar gains. 

For example, Anthropic’s head of Claude Code, Boris Cherny, previously said he hasn’t written a line of code in months, instead relying on the company’s AI model to generate it. Within the rest of Anthropic, the company told Fortune that between 70% and 90% of its total code was now AI-generated.  At Spotify, co-CEO Gustav Söderströn said last month that the company’s best developers hadn’t written a single line of code since December and have shipped over 50 new features in 2025 using AI-assisted workflows.

But, as demonstrated by Amazon’s recent issues, the productivity gains that are most visible at AI labs and agile startups may be harder to replicate at large enterprises with legacy systems and complex codebases. Where smaller teams can move fast and absorb mistakes, companies like Amazon operate infrastructure where a single bad deployment can affect millions of customers.

A September report from Bain & Company found that even though programming was “one of the first areas to deploy generative AI,” the actual savings have been modest and the results “haven’t lived up to the hype.” Meanwhile, research from security firm Apiiro showed that developers using AI introduced roughly ten times more security issues than those who did not.

AI models, as AI researcher Andrej Karpathy has noted, can make subtle conceptual errors, over-complicate code, and leave unused code behind—problems that are manageable in a controlled environment but harder to catch and fix at scale. A December report from code review firm CodeRabbit, which analyzed 470 open-source GitHub pull requests, found that AI-authored code contained roughly 1.7 times more issues overall than human-written code. Larger organizations tend to have more stakeholders, more review layers, and more dependencies, an environment where AI-generated code is more likely to introduce unexpected failures.

“It’s just going to take longer for larger organizations like AWS, or like Nvidia to implement this…because you have so much legacy code,” Loker said.. “There’s way less documentation within it, there’s less searchability for the AI to pick up on…so it’s harder to find the context sometimes. You’re going to end up introducing problems.”

There are also questions about whether the benchmarks used to measure AI’s coding ability reflect real-world tasks. A recent study by METR, an AI evaluation organization, found that half of AI coding solutions graded as passing on a prominent industry test—which is itself graded by an AI model—would actually have been rejected by human reviewers for inadequate quality.

Toby Ord, Senior Researcher at the Oxford Martin AI Governance Initiative, said current estimates of AI coding ability are “indeed overstating things, and perhaps by a significant factor.”

Another issue is how the companies themselves are measuring the “success” of AI coding, according to Loker. “It’s very easy to measure throughput increase,” he said. “What is not easy to measure at this point is the causality of what happens after.” The metrics traditionally used to gauge developer productivity—features shipped, code committed—look strong when AI is involved, but don’t capture downstream consequences like bugs, rollbacks, or time spent cleaning up. “That’s not necessarily the only metric of my company’s code health as a whole,” he said.

Companies rolling out AI at scale also risk accumulating what engineers call technical debt—code that functions in the short term but becomes increasingly costly to maintain. “We’re producing tech debt using AI at a clip that I can’t even fathom,” Loker said. “It’s probably three to four times what it was previously.”

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The U.S.-Israeli war on Iran is already lost for the United States. Even if Iran is militarily defeated, it is unlikely the United States’ political objectives will be achieved. And, on balance, the United States will come out weakened from this war.

President Trump’s biggest problem lies in his attempt to square an impossible circle: imposing regime change in Iran without committing ground troops. Trump understands that neither his MAGA base nor the U.S. public has any appetite for another prolonged ground war in the Middle East. But regime change from the air does not work for a 90 million-strong country that is four times the size of Iraq and has been preparing for this eventuality for decades. The United States is beleaguered by the paradox of a leadership wanting to reimpose its global might through coercion and hard power and a population fundamentally opposed to any war that entails a significant expenditure of U.S. lives.

Why Iran Is Harder to Break Than It Looks

Despite all the talk of a downgraded Iran in the last two years, recent events have demonstrated the country’s capacity to resist. Iran’s resilience relies on a military and security architecture that is highly decentralized, with overlapping command structures between the regular armed forces and the Islamic Revolutionary Guard Corps. Recent days have shown how thoroughly Iran has developed extensive contingency planning designed to ensure continuity even under sustained attack. Airstrikes on Iran’s leadership have been ineffective — possibly even counterproductive, given their radicalizing effect on pro-government sectors of the population and their triggering of predetermined war protocols.

Equally important, Iran’s strategy is built around asymmetric warfare and escalation management. Its arsenal of weapons and proxy networks allow it to reap chaos across the region while imposing high costs on its adversaries. Iranian drones and missiles are relatively cheap to produce, but shooting them down requires interceptors that cost as much as 200 times more — and are limited in supply.

This leaves Trump facing a strategic trap. He must choose between the political cost of failing to achieve his regime change objectives and the political cost of walking back on his domestic promise of no more forever wars. The only viable exit strategy is to manufacture the appearance of victory: declaring that the objectives have been met even when they clearly have not.

The Peace Deal That Was Sabotaged the Day Before the Attack

Even if Trump manages to save face domestically, the war has already been lost at the international level — and the most damning evidence of that may be what happened the day before the bombs fell.

The first source of resentment is that the United States entered this war at Israel’s behest. Israel has been pushing for a decisive confrontation with Iran for years, against the repeated warnings of Washington’s other traditional partners in the Persian Gulf. Gulf states, organized in the Gulf Cooperation Council, opposed this war from the start — they understood that a major conflict with Iran would destabilize the entire region. They were not given prior notice of an attack meticulously planned with Israel. Prince Turki al-Faisal, Saudi Arabia’s former intelligence chief, was reflecting broadly felt regional sentiment when he told CNN: “This is Netanyahu’s war.”

This opposition led several states to support diplomatic efforts that were actively underway when the attack began. The day before the attack, Oman announced a breakthrough: Iran had agreed not to stockpile fissile material — a concession that went beyond anything Iran had agreed to in the 2015 JCPOA, which Trump had previously scuttled. “A peace deal is within our reach,” the Omani foreign minister said — before declaring the following day, once the strikes had begun: “I am dismayed. Active and serious negotiations have yet again been undermined.”

That agreement died on the runway. It is worth sitting with that fact.

How the War Is Fracturing U.S. Alliances in the Gulf

The Gulf states’ second grievance is that this war has seriously jeopardized their own security. As a result of the U.S.-Israeli attack, Iran retaliated against installations in Gulf states hosting U.S. military bases. In the Gulf, Iranian drones and missiles have struck targets in Bahrain, Kuwait, the United Arab Emirates, Oman, Saudi Arabia, and Qatar. There is rising anger in these countries that whereas the United States has done little to shield them from these strikes, it has done a great deal to protect Israel. This dynamic creates precisely the strategic outcome Iran has long sought: to erode the foundations of the U.S. security architecture in the Gulf. If trust between Washington and its Gulf partners weakens — potentially leading some states to eventually downgrade their security cooperation — that alone represents a significant strategic victory for Iran.

Bahrain did successfully lead a UN Security Council resolution condemning Iran for these strikes. But Gulf states’ hostility toward Iran is not the new development here. The new development is the regional resentment toward the United States — given that all parties knew Iran would likely attack its neighbors if Washington struck first.

The situation could deteriorate further if Washington, encouraged by Israel, chooses to double down on the total destruction of Iran rather than seek an exit strategy. Nobody in the region — except Israel — wants a prolonged war or the total collapse of the Iranian state. The specter of Libya’s failed state and Syria’s civil war still haunts the region. As a result, Iran’s neighbors mostly distrust the CIA’s renewed support for Kurdish militants, as well as growing talk of stoking Azeri, Baloch, and Arab nationalist movements.

Yet many of Trump’s domestic allies remain oblivious to these concerns. A good if baffling example of this deep-seated ignorance was Sen. Lindsey Graham’s recent threat to GCC states. “Get more involved as this fight is in their backyard… if not, consequences will follow” — captures the depth of that disconnect.

The Global Economic Fallout

Beyond the Middle East, this war now threatens the entire global economy. Oil prices have surged as a result of the selective closure of the Strait of Hormuz. In the United States, gas prices have risen sharply, fueling fear among Republicans that a continued energy crisis could hurt them in the midterm elections. In parts of Asia, the impact is being felt not only in rising fuel and liquefied gas prices but in supply constraints — several countries in South and Southeast Asia are already experiencing energy rationing, resulting in shortened work weeks, business closures, and partial school shutdowns.

Europe faces its own vulnerabilities. With the end of winter providing some relief, gas reserves nevertheless remain low. Russia has been quick to offer Europe an energy lifeline — which Europeans have so far rejected, determined to uphold their sanctions. Meanwhile, Washington first gave permission to India to purchase limited quantities of Russian oil, then removed sanctions on Russian oil altogether, albeit temporarily. Russia looks set to be among the war’s clearest beneficiaries.

China, highly dependent on Gulf oil imports, will also be forced to seek alternative energy sources — likely accelerating its reliance on Russian oil. But in the longer run, the war tilts the strategic balance decisively in Beijing’s favor. A protracted conflict consumes U.S. military resources globally, including in East Asia — the removal of the THAAD missile defense system from South Korea is an early example of that overreach.

The war will further erode Washington’s global prestige and deepen doubts among key allies about the reliability of U.S. leadership. China has spent years carefully nurturing its relations with Gulf states, including Saudi Arabia — and a net result of this war will be the consolidation of those ties. Some analysts have also argued that the energy shock could further accelerate a global transition toward renewables, raising global demand for Chinese solar panels, electric vehicles, and batteries. Against the backdrop of U.S. military adventurism, China’s reputation for diplomacy and economic stability will continue to gain global appeal.

The Nuclear Paradox

One of the great ironies of this war is that it marks the end of any significant deterrence of Iran — including on its nuclear program. If Iran survives the devastating destruction brought upon it, its appetite for a nuclear deterrent will have significantly increased. A likely consequence of this war, therefore, will be to accelerate the very threat it professed to avert.

Operation Epic Fury is increasingly looking like an epic fail. What began as an attempt to demonstrate the ongoing relevance of unrivaled U.S. military power is fast becoming one of the most consequential strategic miscalculations of this century — a pivotal moment in the steady erosion of U.S. hegemony.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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Britannica and Merriam-Webster have filed a lawsuit against OpenAI, alleging that the AI giant has built its $730 billion company on the back of their researched content.

In a filing submitted to the Southern District of New York, the companies accuse OpenAI of cannibalizing the traffic and ad revenue that publishers depend on to survive. “ChatGPT starves web publishers, like [the] Plaintiffs, of revenue,” the complaint reads. Where a traditional search engine sends users to a publisher’s website, Britannica and Merriam-Webster allege ChatGPT instead absorbs the content and delivers a polished answer. It also alleges the AI company fed its LLM with researched and fact-checked work of the companies’ hundreds of human writers and editors.

The case is the latest in a series accusing AI firms of data theft, raising questions about what counts as public knowledge and what information online should be off-limits for AI use. A group of anonymous individuals sued OpenAI in 2023, alleging that the AI giant stole “vast amounts” of personal information to train its AI models. And in 2024, two writers sued the company, representing writers whose copyrighted work they allege had been “pilfered by” OpenAI and partner Microsoft. But these lawsuits aren’t solely confined to the ChatGPT maker. Anthropic, Perplexity, and nearly every other major AI company have all faced lawsuits alleging some form of copyright infringement.

The lawsuit argues that OpenAI’s use of their content could produce a positive feedback loop in which declining advertising and subscription revenue leads to lower-quality content, which in turn further reduces revenue. 

“Less content of poorer quality will further result in reduced revenue, and thus less spending on content creation,” the complaint alleges, “spawning even less content of even poorer quality and even less revenue, and so on in a downward spiral for content creators like Plaintiffs.” 

The lawsuit comes after the plaintiffs reached out to OpenAI in November 2024 to discuss a potential licensing agreement, that OpenAI rebuffed, according to the complaint. The plaintiffs seek to hold OpenAI accountable for the substantial harm and “illicit profits” it is generating from allegedly infringing on their copyrighted material. The lawsuit alleges OpenAI is also in violation of the Lanham Act (which covers trademark registration) when ChatGPT makes up content or hallucinates content and falsely attributing information to the plaintiffs. They’re asking the court for a permanent injunction to stop OpenAI from continuing to use their material.

“ChatGPT helps enhance human creativity, advance scientific discovery and medical research, and enable hundreds of millions of people to improve their daily lives,” a spokesperson for OpenAI said in a statement to Fortune. They added that their AI models “empower innovation and are trained on publicly available data and grounded in fair use.”

The alleged plagiarism of “plagiarize” and the Hamilton-Burr duel

But Merriam-Webster and Encyclopedia Britannica allege ChatGPT plagiarizes the information their human researchers, writers, and editors produce. In an apt example, the complaint describes a prompt asking “How does Merriam-Webster define plagiarize?” to which the model reportedly responded with a definition identical to the one found in the Merriam-Webster dictionary. The complaint adds that the dictionary has been registered with the U.S. Copyright Office.

That alleged plagiarism extends beyond copying dictionary definitions. The complaint outlines questions about specific historical events, for example, to show how the AI mimics the publishers’ unique selection and curation of content. When a user asked ChatGPT for “10 Things You Need to Know About the Hamilton-Burr Duel, According to Hamilton’s Burr,” ChatGPT reportedly reproduced an identical specific selection and ordering of quotes found in a copyrighted Britannica article, including the exact snippets curated by Britannica’s editors. The model also noted that Britannica had fact-checked the article.

The plaintiffs ultimately argue that these practices threaten to seriously undermine their longstanding business models. “OpenAI imperils the very market for the high-quality content that it copies and reproduces.”

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With graduation season just weeks away, millions of college seniors are preparing to walk across commencement stages and become the youngest members of the workforce. But for the class of 2026, that transition may be rockier than ever, with BlackRock CEO Larry Fink issuing a warning that the promise of a four-year degree as a pathway to a stable career is beginning to crack.

Fink stressed at BlackRock’s 2026 Infrastructure Summit that he’s “worried that when this year’s college graduates enter the workforce, we could see the highest unemployment rate among them in years—even without a recession.”

At the core of his concern: tech is rapidly reshaping the very entry-level roles that have long served as the first rung for college graduates.

“The speed at which AI is changing, we’re not adapting our society fast enough,” the 73-year-old added. “Really post World War II, the pathway to a white-collar job was a college education, and AI is going to disrupt many of those types of jobs.”

The unemployment rate among recent college graduates ages 22 to 27 currently sits at 5.6%, according to the Federal Reserve Bank of New York—near levels not seen since 2013, excluding the pandemic. And demand for early-career roles continues to tighten. Job postings on Handshake, a platform for college students and recent graduates, fell more than 16% between August 2024 and August 2025, while the average number of applications per role has jumped 26%. 

For Gen Z soon entering the workforce, it’s an early sign that the traditional first rung of the career ladder is starting to give way.

AI will create skilled-trade jobs—but the workforce isn’t ready, Larry Fink warns

Despite the warning, Fink pushed back on the idea that college is no longer worth it at all—and he pointed to his own experience. 

After graduating from the University of California, Los Angeles in 1974 with a political science degree, Fink said he didn’t feel ready for the workforce. He went on to earn an MBA with a focus in real estate and then launched a career first at investment firm First Boston (later acquired by Credit Suisse) before spending the last four decades building BlackRock into the world’s largest asset manager.

Still, he cautioned that the college-to-career pipeline is no longer universal, arguing that the traditional four-year degree is becoming just one of several viable paths to success.

“The key for life for everyone is to find their purpose,” Fink said. “For some people, their purpose will remain to get a four-year or advanced degree, and they could take that forward—but that’s not going to be the pathway for everybody.”

Where demand is growing—with not enough supply—is in the skilled trades, fueled in part by the expansion of AI infrastructure like data centers.

“[AI] is going to create many jobs and we’re not prepared as a society to fulfill those jobs,” Fink said. “And to me, this is a crisis.”

To help address the gap, BlackRock committed last week to invest $100 million in skilled-trade programs. The initiative aims to work with nonprofit and workforce development partners to reach 50,000 workers over the next five years in roles like electricians, HVAC technicians, plumbers, and ironworkers.

“AI is going to create a lot of skilled jobs needs and the biggest issue confronting our country today and other countries is the speed at which this change is occurring,” he added.

Last year, BlackRock led a group of investors including Microsoft and Nvidia to purchase Aligned Data Centers for $40 billion.

Fortune reached out to BlackRock for further comment.

As Fink warns of a job ‘crisis,’ other CEOs encourage Gen Z to lean into the uncertainty

Fink isn’t alone in his concerns. More than half of employers view the job market for the class of 2026 as “poor” or “fair,” according to a survey from the National Association of Colleges and Employers—the most pessimistic reading since the start of the pandemic.

Still, many CEOs are striking a more optimistic tone, framing the moment not just as disruption, but opportunity.

AMD CEO Lisa Su pointed to the upside for graduates entering the workforce who lean on the technology to find new ways to innovate.

“The Class of 2026 will be graduating at an exciting time, as AI transforms our world and expands what is possible,” she said in a statement announcing her as MIT’s 2026 commencement speaker. “And I look forward to celebrating them as they prepare to share their skills and ideas with the world.”

Bank of America CEO Brian Moynihan struck a similar tone—acknowledging the anxiety many young people feel, but encouraging them to channel it. 

“If you ask them if they’re scared, they say they are. And I understand that,” Moynihan told CBS News earlier this year. “But I say, harness it … It’ll be your world ahead of you.”

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The Iran war has rattled the global flow of oil, with steeper fuel costs already straining households worldwide. And in the U.S., drivers are now facing the highest prices they’ve seen at the pump in about two and a half years.

According to motor club AAA, the national average for a gallon of regular gasoline jumped over $3.84 on Wednesday, up from $2.98 consumers were paying before the U.S. and Israel launched the war with joint attacks against Iran on Feb. 28. The last time gas prices were as expensive as they are now was in September 2023.

“It’s pretty hard. I mean, times are tough for everybody right now,” Amanda Acosta, a Louisiana resident, told The Associated Press while filling up her car’s tank this week. “I’m getting way less gas and paying way more money.”

She isn’t alone. Pain at the pump has been one of the most immediate economic impacts of the conflict, because the price of crude oil — the main ingredient in gasoline — has soared and swung rapidly in recent weeks, due to supply chain disruptions and cuts from major producers across the Middle East. Brent crude, the international standard, was trading at nearly $108 a barrel Wednesday, up from roughly $70 just weeks ago. And benchmark U.S. crude is now going for almost $98 a barrel.

Many eyes are on the White House. Before the war, President Donald Trump once bragged about keeping gas prices low. But he’s since pivoted to try and paint high oil prices as a positive outcome for the U.S. Last week, Trump said that because the U.S. is now largest crude producer in the world, “when oil prices go up, we make a lot of money.”

Companies that supply oil benefit from higher prices. But steeper costs always pinch consumers’ wallets — and today’s prices arrive as many households continue to face wider cost of living strains. It could also push up already stubborn inflation, at least in the short run, and potentially hammer the economy more significantly if rising costs drag on. Experts say that could apply more pressure on the Trump administration, particularly as affordability continues to stay at the top of voters’ minds.

Drivers see impact of higher fuel prices

“I just want all of it to end. I just want to get out of there, out of Iran,” said Meghan Adamoli, a New Jersey resident who was among customers filling up at a Multani station on Tuesday. While Adamoli said she can personally “roll with the punches” when it comes to gas prices, she knows that a lot of others can’t.

Dan Bradley, a flatbed truck driver from Pennsylvania, said he’s felt the rising prices for both his work and personal vehicles. Beyond regular gasoline, the U.S. average for diesel neared $5.07 a gallon on Wednesday, per AAA, its highest level since 2022. Before the Iran war started, diesel was averaging at about $3.76 a gallon.

“It sucks when you’re filling up,” said Bradley. “What are you going to do, not get gas?”

Meanwhile, Texas resident Clay Plant said rising oil costs is good for the economy of his town, Lubbock. He sees more people work as drilling picks up.

“It’s kind of a good sign for us in west Texas,” Plant said. “I look at it as my friends and family get to eat and they get to go to work.”

Search for more supply and uncertainty ahead

The U.S. is now a net exporter of oil — and other parts of the world that rely more heavily of fuel imports from the Middle East, notably Asia, have seen starker energy shocks amid the war. But that doesn’t mean America is immune to price spikes.

Oil is a globally-traded commodity. And most of what the U.S. produces is light, sweet crude — but refineries on the East and West coasts are primarily designed to process heavier, sour product. So the country also needs imports.

The road ahead is uncertain, and prices could worsen if the war drags on. Iran has effectively halted nearly all tanker movement in the key Strait of Hormuz, where roughly one-fifth of the world’s oil once sailed through on a typical day. That’s led to cuts from some major producers in the region, because their crude has nowhere to go. Trump has demanded that other countries send warships to reopen the waterway, but has yet to garner sign-ons as many ask for more clarity about America’s next steps for the war. Meanwhile, Iran, Israel and the U.S. have all struck oil and gas facilities.

All of this has left countries scrambling for other supply. Last week, the International Energy Agency pledged to release 400 million barrels of oil from its member nations’ stockpiles. Trump, who previously downplayed the need for reserve oil, later confirmed that the U.S. would pull 172 million barrels from the Strategic Petroleum Reserve as part of this effort. The administration also announced it will temporarily free up Russian oil from U.S. sanctions for its war on Ukraine.

Still, analysts say these efforts will be a short-term bridge. Refineries buy crude oil in advance, and it takes time for new supply to trickle down to consumers. While steep crude costs is the top driver of gas prices today, a handful of other factors are also on the table. U.S. gas prices typically tick up a bit at this time of year, as more drivers hit the road and the warming weather brings a shift to “summer blend” fuel, which is more expensive to make than winter blend.

As always, some states also have pricier averages than others, due to factors ranging from nearby supply to differing tax rates. On Wednesday, California had the highest average of over $5.56 per gallon, while Kansas had the lowest of about $3.23.

Experts warn all of this could eat into wider spending. As consumers pay more to cover necessities like gas, many households — particularly those that are middle or low income — will be forced to cut their budgets in other places, explains Francesco D’Acunto, a finance professor at Georgetown University. More expensive fuel also impacts other sectors, from transporting groceries to household utility bills.

These combined inflation shocks, and overall high uncertainty during times of war, also “makes many houses and consumers freeze,” D’Acunto added. He said that could cause some to hold off on bigger financial decisions — like buying a car or house — farther down the road. “So potentially even that will have such an effect on the overall economy.”

________

AP Journalists Stephen Smith in Madisonville, Louisiana, Geoff Mulvihill in Cherry Hill, New Jersey, and Mingson Lau in Claymont, Delaware, contributed.

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U.S. companies will be allowed to do business with Venezuela’s state-owned oil and gas company after the Treasury Department eased sanctions, with some limitations, on Wednesday as the Trump administration looks for ways to boost world oil supplies during the Iran war.

The Treasury issued a broad authorization allowing Petróleos de Venezuela S.A, or PDVSA, to directly sell Venezuelan oil to U.S. companies and on global markets, a massive shift after Washington for years had largely blocked dealings with Venezuela’s government and its oil sector.

The move highlights the increased pressure that the Republican administration is under to ease soaring oil prices as the United States, along with Israel, wages a war with Iran without a foreseeable end date. Global oil prices have since spiked as Iran halted traffic through the narrow Strait of Hormuz, where one-fifth of the world’s oil typically passes through from the Persian Gulf to customers worldwide.

The U.S. action is designed to incentivize new investment in Venezuela’s energy sector and is intended to benefit both the U.S and Venezuela, while increasing the global oil supply, a Treasury official told The Associated Press. The official was not authorized to discuss the matter publicly and spoke one condition of anonymity.

Since the ouster and arrest of Nicolás Maduro as Venezuela’s president during a U.S. military operation in January, President Donald Trump has said the U.S. would effectively “run” Venezuela and sell its oil.

The Treasury Department’s license provides targeted relief from sanctions, but does not lift the penalties altogether. The license allows companies that existed before Jan. 29, 2025, to buy Venezuelan oil and engage in transactions that would normally be banned under American sanctions, reopening trade for a major oil producer to global markets.

There are some limits.

Payments cannot go directly to sanctioned Venezuelan entities such as PDVSA, but must be sent instead to a special U.S.-controlled account. In other words, the U.S. will allow the oil trade but will control the cash flow.

Additionally, deals involving Russia, Iran, North Korea, Cuba and some Chinese entities will not be allowed. Transactions involving Venezuelan debt or bonds will not be allowed.

The license is expected to give a massive boost to Venezuela’s oil-dependent economy and help encourage companies that have been apprehensive to invest. The decision is part of the Trump administration’s phased-in plan to turn around Venezuela. But critics of the acting Venezuelan government argue that the move rewards Venezuela’s leadership -– all loyal to Maduro and the ruling party -– while repression, corruption and human rights abuses continue.

Many public sector workers survive on roughly $160 per month, while the average private sector employee earned about $237 last year, when the annual inflation rate soared to 475%, according to Venezuela’s central bank, and sent the cost of food beyond what many can afford.

Venezuela sits atop the world’s largest oil reserves and used them to power what was once Latin America’s strongest economy. But corruption, mismanagement and U.S. economic sanctions saw production steadily decline from the 3.5 million barrels per day pumped in 1999, when Maduro’s mentor, Hugo Chávez, took power, to less than 400,000 barrels per day in 2020.

A year earlier, the Treasury Department under the first Trump administration locked Venezuela out of world oil markets when it sanctioned PDVSA as part of a policy punishing Maduro’s government for corrupt, anti-democratic and criminal activities. That forced the government to sell its remaining oil output at a discount — about 40% below market prices — to buyers such as China and in other Asian markets. Venezuela even started accepting payments in Russian rubles, bartered goods or cryptocurrency.

The new license does not allow payments in gold or cryptocurrency, including the petro, which was a crypto token issued by the Venezuelan government in 2018. __

Garcia Cano reported from Caracas, Venezuela.

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The war in Iran has already transformed the world’s energy map. It might yet redraw America’s auto market.

Now in its third week, the U.S. and Israeli military campaign in Iran has escalated to involve targets across the Middle East, including the Strait of Hormuz — a narrow waterway at the mouth of the Persian Gulf that serves as the world’s most critical fossil fuel chokepoint. The war has effectively closed the oil tanker traffic that used to navigate the strait, which on a normal day carries up to 20% of the world’s traded petroleum.

Fuel costs worldwide have soared as a result. Average gas prices in the U.S. are now $3.79 a gallon, up from $2.92 a month ago, reminding drivers of the 2022 energy shortage and even of the devastating oil shocks of the 1970s.

But unlike during those crises, the world now possesses a massive, rapidly scaling, and for the most part readily available asset to soften the blow: the electric vehicle.

The global EV fleet has been growing for years, gradually chipping away at the world’s oil consumption as drivers turn to charging ports instead of gas stations. Last year, EVs worldwide avoided the consumption of 1.7 million barrels of oil per day, according to a report published Wednesday by Ember, an independent energy think tank based in the U.K. That’s roughly 70% of the 2.4 million barrels Iran exported daily through the Strait of Hormuz in 2025.

While the crisis has sent global oil prices soaring, the declining need for petroleum in transportation is providing a critical cushion in some countries. And the longer fuel prices remain elevated, the more attractive EVs become to buyers.

“Oil is a particularly tricky resource to replace,” Daan Walter, a researcher at Ember and the report’s lead author, told Fortune. “It has been for 125 years now, except for the past five or six years, when we’ve had this new competitive lever in electric vehicles.”

Electrifying demand

In the U.S., EV purchases hit a wall over the past few months as President Donald Trump rescinded many of the subsidies and incentives the Biden administration had installed to facilitate the transport sector’s electrification. Those measures mostly expired in September, and EV sales for the year ended up falling by 2%.

But the Iran conflict has sparked a revival of consumer interest. Search traffic for EVs during the first week of the conflict jumped 20%, according to CarEdge, a car shopping platform, with interest in popular models like the Tesla Model Y and Chevrolet Equinox nearly doubling.

For now, the conflict in Iran and higher gasoline prices are likely to only influence drivers who were already in the market for a new car, Elaine Buckberg, a senior fellow at Harvard University’s Salata Center for Climate and Sustainability and a former chief economist for General Motors, told Fortune.

But that could change if prices stay high for much longer. “Gasoline prices are one of the biggest elements of people’s perception of inflation because you buy it so regularly,” Buckberg said. “It takes three to six months of persistently higher prices before people say, ‘Maybe I should go out and switch cars to one that’s more fuel efficient, including an EV.’”

EV drivers outside the U.S. already know how much they might be able to save. In the U.K., EV drivers saved an average of £870 ($1,162) a year by charging their cars instead of fueling up, according to an analysis published last week by the nonprofit Energy & Climate Intelligence Unit. But if oil prices remain above $100 a barrel, as they have for most of the conflict, those annual savings could jump to £1,000 ($1,336).

In the U.S., the costs of owning and charging an EV depend on several factors, including local electricity prices and whether drivers can charge their cars at home. And for now, buying an electric car tends to be more expensive than buying a gas-powered one, although prices are falling due to greater competition and more choices of lower-priced models.

But EV drivers are likely to be rewarded over the course of their car’s lifetime—the New York Times found last year that driving 100 miles in a home-charged EV costs on average a little more than $5, while the same distance in a standard gas-powered car costs on average $12.80.

Nowhere to hide

The Trump administration has framed the pain Americans are feeling at the pump as a short-term problem, and claimed that the U.S. is insulated from the oil crisis because it is a large producer in its own right. But being a net exporter of oil does little to shield the U.S. from volatility, according to Ember’s Walter.

“In some ways, no one is safe,” he said. “Even if you live between a gas well and a refinery, even then your prices are going up.”

Oil is a global commodity, and unless a government enacts export bans, a barrel of oil produced in the U.S. will go to whoever pays the most wherever they are, Walter said. That means American consumers remain tethered to the same price volatility as the rest of the world, regardless of how much crude is pumped from U.S. soil. In Texas, for example, one of the world’s largest oil-exporting regions, gasoline prices have risen 25% since the war began, faster than in oil-importing nations like the U.K. and France during the same period, Walter said.

Because volatile gasoline prices have such a significant bearing on consumer sentiment, experts have long argued that transportation reliant on locally generated electricity can be an economic and political hedge.

“A shift towards EV basically would protect the economy from downside,” Buckberg said. “That link from oil geopolitics to oil prices to gasoline prices could be broken.”

The last time a global geopolitical shock sparked an energy crisis was in 2022, when Russia’s invasion of Ukraine sent global oil and gas markets into a frenzy. A lot has changed since then to make EVs a more palatable option as gasoline prices rise, Buckberg said. For one, the world is no longer limited by a microchip shortage that strained EV manufacturing in the early 2020s. 

But electric and hybrid vehicles have also become more affordable and accessible to a wider variety of consumers, particularly in emerging markets in East and Southeast Asia, according to previous Ember research. In China, the world’s biggest EV market, the country’s existing electric car fleet accounts for more than $28 billion a year in avoided oil imports, Ember’s latest report found.

“We’re no longer living in a world of risk-free fossil fuels. We’re living in a world where everything is risky and it now becomes a question of which risks do you want to take,” Walter said. 

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Sri Lanka has just introduced a four‑day workweek—not to boost work‑life balance, but because the war in Iran is threatening to drain its petrol tanks dry.  

The government has declared every Wednesday a holiday for most public institutions in a desperate bid to slash petrol use, as war in the Middle East threatens vital oil shipments through the Strait of Hormuz.

All state institutions, along with schools and universities, will shift to a four-day work week, starting this Wednesday. Essential services like hospitals will stay open, but everyone else is being told to stay home, log on where possible, and use as little gas as they can. 

Even the private sector is being asked to follow the mandate, too.

Sri Lanka government has declared Wednesdays a holiday from 18 March 2026 for Government employees, schools, universities and courts, the Commissioner General of Essential Services says.

Private institutions have also been requested to follow, while all Government events are… pic.twitter.com/mmAp5EKjSO

— Sri Lanka Tweet 🇱🇰 (@SriLankaTweet) March 16, 2026

Officials say Sri Lanka has roughly just six weeks of fuel reserves left. That’s why they’ve rolled out the four‑day week almost overnight, suspended public ceremonies, and launched a National Fuel Pass to ration how much petrol people can buy. And they’re not the only country introducing these emergency measures to avoid running out of fuel. 

There’s a pattern worth naming here. The three major crises since 2020—the pandemic, the 2022 European energy shock, now the Iran war—have each pushed governments to reach for the same lever: send people home, cut the commute, compress the week. And every time, some portion of that change proves permanent. Workers adjust. Productivity holds. And the five-day, in-office standard quietly loses a little more of its claim to inevitability. Look around Asia to see how Sri Lanka is far from alone.

Pakistan, the Philippines, and other Asian nations are welcoming a 4-day week and remote work

Across Asia, governments are quietly cutting working days, commutes, and non‑essential travel in a bid to stretch fuel supplies as far as possible.

Pakistan has already implemented a four-day week for some government offices and shut schools, as well as imposing a ban on in-person meetings. Meanwhile, all public and private firms are being mandated to ask 50% of their workforce to work from home. 

The Philippines is also adopting a four-day work week for government staff, and urged workers more generally to work from home where possible. Vietnam is also telling citizens to stay home, as well as to ride bikes, carpool, and use public transport, and restrict personal vehicle usage.

Other Asian nations are taking quirkier energy-saving steps. In Thailand, the government is urging office workers to ditch suits for short‑sleeved shirts so buildings can dial down the air‑conditioning. It’s also called on people to take the stairs instead of elevators. 

Myanmar is limiting private cars on alternate days. Bangladesh has introduced early Ramadan holidays and India has asked consumers not to panic, because hoarding—or turning to the black market—will only make the situation worse. 

Where the four‑day work week is here to stay

While these emergency measures are temporary, elsewhere, the four‑day work week has been introduced under far less dramatic circumstances—and often with surprisingly positive results. 

The U.K. ran the world’s largest four‑day week pilot in 2022, involving dozens of companies that paid staff 100% of their salary for 80% of the time in exchange for a commitment to maintain performance. A year later, 89% of participating firms were still operating a four‑day week and just over half had made the switch permanent—citing higher revenues, better retention, and employees who were less burned out and more loyal. And many other countries have been trialling shorter weeks across dozens of companies with strong early feedback on productivity and quality of life.

Across Europe and beyond, the idea is slowly moving from a rare perk to a mainstream policy experiment. Belgium passed legislation allowing workers to compress a full‑time job into four longer days, the UAE shifted its public sector to a four‑and‑a‑half‑day week, and even companies that don’t want to make permanent changes have launched “recharge days” and Summer Fridays.  

Sri Lanka’s emergency measures may be lifted the moment oil flows freely again. But the precedent—that a shorter week is a policy tool, not just a perk—is becoming established across three continents and counting.

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Good morning. Agentic AI could be the catalyst that gets most finance chiefs on board with using AI to support the finance function.

Aneel Bhusri, cofounder and CEO of Workday, an enterprise HR and finance platform with AI, returned to the role last month, two years after stepping down, succeeding Carl Eschenbach, Fortune reported. “I think there’s a lot of misinformation out in the marketplace about AI and SaaS applications,” Bhusri said during a virtual press conference on March 12. “There’s this idea that AI is going to replace a lot of these applications with things like vibe coding. I’m a technologist, and I’ve been in this space for a long time. I just don’t see that happening.”

There will exist a hybrid world, where the best of enterprise apps are paired with the best of AI, and where low-level, rote work gets replaced by agents that drive business processes underneath, Bhusri said. In his first month back as CEO at Workday, he spent time with many financial customers and prospects—and found that many accounting departments are still “running old systems like the one I was part of at PeopleSoft,” he said.

Cloud computing improved software and user experience, but finance teams were slower to adopt it because their systems served fewer users and were heavily customized. But AI is different: it can cut costs, automate complex work, and even enable near real-time audits, he said. “That was not possible with either the legacy on-premise systems or the newer cloud systems,” he said. “They were still business process automation systems, not reasoning and probabilistic engineering systems.”

That distinction is resonating with finance chiefs. For CFOs, “the agentic story and solutions are really what are catching their eye right now,” Bhusri said. “CFOs look at it as, ‘The new way to differentiate how we do business. We need to embrace AI.’” And that, he said, is the reason many will finally move from a legacy system to an AI-driven cloud system.

The shift appears to be gaining momentum more broadly. Gartner recently predicted that 40% of enterprise applications will be integrated with task-specific AI agents by the end of 2026, up from less than 5% in 2025 — a sign that agentic AI is moving from concept to corporate priority.

Workday (No. 455 on the Fortune 500) is moving quickly to capture that momentum. On Tuesday, the company launched Sana from Workday, a new AI tool that can answer questions, complete tasks, and automate routine work across HR and finance. It uses AI agents that can carry out multi-step tasks on their own, for example, reviewing email for receipts and submitting them for approval , and works across apps like Gmail, Outlook, Salesforce, Google Drive, and SharePoint while following company security rules. The tool is based on Workday’s $1.1 billion acquisition of Sana Labs, completed in November 2025.

AI could be the catalyst to spur some finance teams to modernize.

Sheryl Estrada
sheryl.estrada@fortune.com

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With alarming headlines coming out of the Middle East, economists will be wary of sharing forecasts that might unnecessarily spook consumers or investors. Nonetheless, while Wall Street has remained calm(ish) about the disruption to global oil and energy supplies, Moody’s Mark Zandi warns that the longer-term macroeconomic picture has taken a turn for the worse.

Zandi shared that, even prior to the U.S. and Israel launching strikes on Iran, recession odds for the economy had crept up to an alarming threshold. The latest reading on Moody’s economic indicator model—for February, prior to the military action—placed odds of a recession at 49% over the next 12 months.

“Behind the recent jump are primarily the weak labor market numbers, but almost all the economic data have turned soft since the end of last year,” Zandi wrote in a note. Indeed, an image Zandi shared of the Moody’s recession indicator shows that historically, it has been fairly accurate. The indicator spiked above a benchmark of 50 in 2020, in 2007, and 2001—all of which were followed by recessions as defined by the Federal Bank of St Louis.

“It isn’t a stretch to expect the indicator to cross the key 50% threshold amid the Iranian conflict and the resulting surge in oil prices,” Zandi continued. “Oil prices are an important variable in the model, and with good reason: every recession since WWII, save the pandemic recession, has been preceded by a spike in oil prices.”

Moody’s recession call is higher compared to many on Wall Street, where most estimates say the likelihood is growing but is perhaps not in 50/50 territory. Indeed, Oxford Economics’s modelling suggests that oil prices would have to hit $140 a barrel over a two-month period to plunge the world economy into a recession. The strength of the subsequent recovery following a resolution of conflict in the Middle East depends on how quickly shipping through the Strait of Hormuz is normalised.

“The rebound in financial markets has been quick following past major military conflicts in the Middle East since the 1990s, but this time it could be more gradual,” noted Ben May, director of global macro research at Oxford Economics, and Ryan Sweet, chief global economist.

Zandi agrees with the premise, saying higher oil prices won’t level the same amount of economic damage as years prior because production and consumption are better aligned, but added consumers will suffer a significant uptick in the cost of living when they “were already increasingly nervous spenders.”

The Moody’s chief economist said his peers “will be loath to utter the word ‘recession,’” despite evidence to support such a statement, because many were proven wrong when they called a downturn calls over Fed policy a couple of years ago. But Zandi added: “If oil prices remain elevated for much longer (weeks and not months), a recession will be difficult to avoid.”

Happier odds

Some investors feel significantly more optimistic about the probability of a recession. Indeed, while economists generally go by the rule that a recession might happen once every five years, if not more frequently, Apollo Investment’s chief economist Torsten Slok suggests economic downturns are becoming less frequent.

“Between recessions, investors should prepare for sector-specific cycles, such as the current downturn in software, where one or two subsectors face distress while the rest of the economy is fine,” Slok wrote in a note published yesterday. “The bottom line is that credit opportunities arise not just during recessions, but also when there are sector-specific cycles during expansions.”

Oxford Economics’ latest Global Risk Survey is similarly more buoyant. The survey, conducted between February 26 and March 11, found there had been a sharp downturn of expectations since the outbreak of the conflict. However, odds of a global recession still stand at a 1-in-6 chance.

The war has driven scepticism over the prospects of the U.S. economy, Oxford notes. Prior to the military action, three-quarters of respondents felt the recent period of U.S. exceptionalism would continue, but that figure fell significantly as the conflict continued, with little more than half the 174 clients surveyed now expecting the U.S. to remain the fastest-growing G7 economy this year.

Indeed, Wall Street is more widely inclined to agree with lower recession odds. David Mericle of Goldman Sachs wrote this week that the bank’s outlook odds had increased, up by 5 percentage points to 25%, while JP Morgan predicted at the end of last year that the likelihood of a 2026 recession was 35%.

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Good morning. In today’s Fortune:

• It’s Fed day—expect Powell to keep rates at 3.5%.
• Iran: As Trump rages against his allies, Republicans want to know what the plan is.
• Chaos in the Gulf is producing ‘butterfly effects’ far away.
• Why the U.S. doesn’t have enough minesweepers to open the Strait of Hormuz.
• Prediction markets see the war getting longer.
• Nvidia might pay engineers in AI tokens
• Exclusive: AI isn’t destroying consultants, Capgemini says.
• Exclusive: Hinge CEO on the ‘dating recession.’

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