NEW YORK — Market-moving boutique Citrini Research issued a fresh note on Monday cautioning that stubbornly elevated energy prices may erode consumer purchasing power and squeeze profit margins just as Wall Street prices in a second-half rebound.
The research house — best known for a December 2025 artificial-intelligence paper that preceded a broad, one-day sell-off — told clients that Brent crude trading near $92 a barrel and nationwide gasoline averaging almost $3.80 a gallon could “knock as much as 70 basis points off U.S. GDP if sustained through summer.”
“Price relief at the pump has failed to materialize, and the pass-through into freight, plastics and utilities is accelerating,” the 18-page report said. Citrini warned that consensus earnings forecasts for the S&P 500 “do not fully discount a mid-year margin compression episode.”
Energy has climbed roughly 13 % since January, outpacing every other major commodity group. Citigroup energy strategist Maya Lenz, who is not affiliated with Citrini, said in an interview that supply disruptions in the Middle East and disciplined U.S. shale output have “handed OPEC the pricing power it lost in 2014.”
The note lands as investors reposition following the Federal Reserve’s March meeting, where policymakers kept the door open to rate cuts but cited uneven progress on inflation. Bank of America’s latest flow data show $9.4 billion leaving U.S. equity funds in the week ended 22 March, the sharpest outflow in two months.
Still, some strategists downplayed the risk. “Consumer balance sheets are stronger than they were in 2011, the last time oil stayed above $90 for weeks,” said Samira Koch of Bayview Asset Management. She expects the S&P 500 to finish the year “within 4 % of current levels” even if energy remains elevated.
Citrini’s forecast projects a 6–8 % pullback in the benchmark index by early summer, led by discretionary retail, airlines and small-caps. The firm recommends overweighting integrated oil majors and midstream pipeline operators while trimming exposure to travel and apparel.
Whether the grim scenario unfolds could hinge on upcoming earnings calls from big-box retailers and airlines. “If we hear more talk about fuel surcharges and soft ticket sales, the market will start pricing in Citrini’s downside,” a sell-side analyst at a major bank said on background.
Looking ahead, investors will parse March inflation data on 10 April and OPEC’s next ministerial meeting later that week for clues on price direction. Until then, the tug-of-war between sticky energy costs and hopes for easier monetary policy is likely to keep volatility elevated.