March 20 Member Morning Brief: US Plans to Ease Sanctions on Iran While Planning an Additional $200 Billion in Military Spending

1. [US Plans to Ease Sanctions on Iran] US Treasury Secretary Wally Adeyemo stated that the Trump administration is considering easing sanctions on Iran's maritime oil transportation in an effort to stabilize the highly volatile energy market. Previously, Iran had warned that it would expand strikes against energy infrastructure across the entire Gulf region. International crude oil benchmark Brent briefly soared above $118 per barrel before pulling back slightly; natural gas prices also rose sharply.

2. [Plans to Add Additional $200 Billion Military Budget] At the same time, US Defense Secretary Pete Hegseth said that the objective of the operation against Iran "has not changed," and that the operation will "end at the President's discretion." He also confirmed that his department will apply to Congress for an additional $200 billion in military funding for this operation.

Commentary: $200 billion is an extremely large special military budget (for reference, the total US defense budget for fiscal year 2024 is only slightly over $840 billion), indicating that the Pentagon is preparing for a high-intensity or protracted military conflict.

3. [Bank of England Warns of Iran War Impact] The Bank of England has kept its benchmark interest rate unchanged at 3.75% and warned that the Iran war will deliver an "economic shock." Following the announcement, yields on UK government bonds rose. The European Central Bank and the Bank of Japan also kept rates unchanged on Thursday, while the US Federal Reserve announced on Wednesday that it would keep rates unchanged.

4. [US New Home Sales Fall to Lowest Level Since 2022] According to data released by the US government on Thursday, sales of newly built single-family homes fell 17.6% from December to an annualized rate of 587,000 units. This figure came in below all economists' expectations in media surveys. At the same time, the median sales price of new homes in January fell 6.8% year-over-year to $400,500.

5. [Iran Plans to Charge Transit Fee for Ships Passing Through Strait of Hormuz] According to the semi-official Iranian Students News Agency (ISNA), the Iranian parliament is working on a bill requiring ships passing through the Strait of Hormuz to pay Iran a "security transit fee."