The Federal Reserve's Financial Stability Report, released on Friday, underscores the ongoing conflict in Iran as a primary threat to financial stability, particularly due to its impact on global oil prices. The report reveals that approximately 75% of survey respondents consider geopolitical risks their top concern, with nearly 70% identifying the oil shock from the conflict as a significant threat to the financial system. Since the start of U.S.-Israeli attacks on Iran on February 28, global crude oil prices have surged more than 50%, remaining above $100 per barrel. This spike has pushed U.S. gasoline prices to their highest levels since July 2022, contributing to inflation that is now estimated to be roughly 1% above the Federal Reserve's 2% target. The Fed warns that prolonged high energy costs could exacerbate inflationary pressures and slow global economic growth. Additionally, the report highlights concerns about artificial intelligence investments financed through debt and the potential vulnerabilities in private credit markets, which could affect credit availability for riskier borrowers.