OpenAI is considering a contract to deploy its artificial intelligence systems on the “unclassified” networks of the North Atlantic Treaty Organization, according to a person familiar with the matter, who was quoted by Reuters.

The potential agreement comes days after the ChatGPT-maker secured a deal to operate within the Pentagon’s classified network, underscoring a deepening push into military and government contracts.

The Wall Street Journal first reported the possible NATO arrangement. The newspaper said Chief Executive Sam Altman initially told employees that OpenAI was exploring deployment across NATO’s classified systems. A company spokeswoman later clarified that Altman misspoke and that the discussions relate to NATO’s unclassified networks.

The NATO discussions follow OpenAI’s announcement last week that it would deploy its technology within the U.S. Department of Defense’s classified systems. The agreement came after U.S. President Donald Trump directed the federal government to stop working with rival AI firm Anthropic, altering the competitive dynamics for high-value defense contracts.

Anthropic’s removal followed a dispute over contractual terms. Its chief executive, Dario Amodei, has emphasized opposition to using AI models for mass domestic surveillance or fully autonomous weapons. The Pentagon has said it has no interest in deploying AI for surveillance of Americans or for weapons that operate without human involvement, while maintaining that lawful uses of AI should be permitted.

In an updated statement on Monday, OpenAI said its systems “shall not be intentionally used for domestic surveillance of U.S. persons and nationals,” and added that the Pentagon affirmed the AI services would not be used by intelligence agencies such as the National Security Agency.

Altman acknowledged internal concern about reputational fallout. “I think this was an example of a complex, but right decision with extremely difficult brand consequences and very negative PR for us in the short term,” he said during a company meeting, according to the Journal.

A pivot toward defense revenue

Taken together, the Pentagon agreement and potential NATO deployment signal that OpenAI is actively pursuing military and government contracts as a strategic growth channel. Defense institutions offer large, multi-year contracts, predictable funding, and strategic leverage at a time when AI companies are under mounting pressure to convert rapid technological progress into sustainable revenue.

OpenAI operates in a capital-intensive sector. Training frontier AI models requires vast computing infrastructure, specialized chips, and access to large-scale cloud capacity. Backed by major investors including Microsoft and Amazon, the company has expanded aggressively into enterprise services. Still, the broader AI industry is navigating high operating costs and expectations for profitability.

Government contracts, particularly in defense, can provide stable revenue streams less sensitive to consumer spending cycles. They also embed AI providers into the core national infrastructure, strengthening their long-term strategic position. OpenAI appears to be positioning itself as a trusted infrastructure provider rather than solely a consumer-facing chatbot company by securing footholds in the Pentagon and potentially NATO systems.

Unclassified Networks and Their Implications

A deployment on NATO’s unclassified networks would likely focus on administrative, logistical, cybersecurity, or analytical tasks rather than direct battlefield systems. Even so, the symbolic significance is considerable. NATO members have increasingly emphasized AI integration for operational efficiency, cyber defense, and interoperability across allied forces.

Embedding AI tools into alliance-wide systems could give OpenAI visibility across multiple national defense environments. It would also strengthen its standing in future procurement cycles as NATO and member states expand AI capabilities.

At the same time, such moves heighten scrutiny. Civil society groups and some policymakers have raised concerns about the militarization of advanced AI technologies. OpenAI’s contractual language restricting domestic surveillance use appears aimed at mitigating those concerns while preserving access to government markets.

Profit pressures and governance trade-offs

The AI sector is undergoing consolidation around a handful of well-capitalized firms capable of training and deploying cutting-edge models. As competition intensifies and infrastructure costs remain high, companies face pressure to secure durable revenue sources. Defense contracts can offer both financial returns and strategic alignment with national governments eager to maintain technological leadership.

However, deeper involvement in military systems carries reputational and governance risks. Public commitments to safety and responsible use must be balanced against operational demands from defense agencies. Altman’s acknowledgment of “negative PR” underscores the sensitivity surrounding such partnerships. OpenAI has recorded massive uninstallation in the past few days following its deal with the Pentagon.

The potential NATO agreement remains under consideration, and details are limited. Yet the trajectory is that OpenAI is moving beyond consumer and enterprise markets into the realm of national security infrastructure. In doing so, it is seeking not only revenue growth but also long-term leverage in shaping how advanced AI systems are embedded within government and military institutions.

China is prepared to engage in communication at all levels with the United States while steadfastly upholding its core principles and “red lines,” a spokesperson for the National People’s Congress (NPC) Standing Committee said Wednesday.

The comments from Lou Qinjian came one day before the opening of the NPC’s annual session (the “Two Sessions”) and amid concerted efforts by both Washington and Beijing to stabilize bilateral ties ahead of a high-profile summit between President Donald Trump and Chinese President Xi Jinping in Beijing from March 31 to April 2. Lou reiterated China’s long-standing call for mutual respect and peaceful coexistence, urging the U.S. Congress to adopt an “objective” view of China and take concrete steps to improve relations.

“No country has the right to control international affairs, dictate the fate of other nations, or monopolize development advantages, still less to act as it pleases on the world stage,” he told reporters at a pre-session press conference.

At the same time, he emphasized that “China has its own principles and red lines, and as always, will resolutely defend its sovereignty, security and development interests.” The statement is a reflection of Beijing’s dual-track approach: openness to pragmatic engagement on trade, investment, and global stability, combined with unyielding positions on core issues including Taiwan, technology controls, South China Sea claims, and support for partners such as Iran and Venezuela.

Strained Ties Amid Multiple Crises

Bilateral relations — already damaged by trade frictions, technology decoupling, and sanctions — have faced additional pressure from two major geopolitical shocks in recent months:

The U.S.-led raid that captured Venezuelan President Nicolás Maduro in Caracas in January 2026 disrupted a key oil supplier and strategic ally for China.

The U.S.-Israeli military campaign against Iran that resulted in the death of Supreme Leader Ayatollah Ali Khamenei further threatens Iran’s role as a major oil supplier and geopolitical partner for Beijing.

Lou called for an immediate ceasefire in the Iran conflict and urged respect for Iran’s sovereignty, implicitly criticizing U.S. and Israeli actions. Both Iran and Venezuela remain critical sources of discounted crude for China, and disruptions to either have forced Beijing to accelerate diversification efforts while navigating U.S. pressure to reduce reliance on sanctioned suppliers.

Pre-Summit Diplomacy Offers Hope for Truce

A White House official confirmed Trump will visit China from March 31 to April 2 — his first trip since 2017 — though Beijing has not yet issued an official announcement. Bloomberg News reported Tuesday that top trade negotiators from both sides are expected to meet in Paris next week to discuss potential business deals linked to the summit.

The NPC session (March 5–11) will provide a key platform for China to outline its economic priorities, defense posture, and foreign policy stance for 2026. Analysts expect Premier Li Qiang’s government work report to emphasize technological self-reliance, consumption-driven growth, and measured openness to foreign investment — while reaffirming firm positions on Taiwan and core sovereignty issues.

The comments reflect Beijing’s calibrated strategy: signaling readiness for high-level dialogue to prevent further deterioration while drawing clear boundaries on non-negotiable issues. The upcoming Trump-Xi summit — if it proceeds as planned — will likely focus on stabilizing trade flows, managing technology competition, and addressing immediate flashpoints (Iran, Venezuela, Taiwan) rather than resolving deep structural disputes.

For global markets, the tone from Beijing offers modest reassurance that escalation can be avoided, but uncertainty persists. Oil prices remain elevated (Brent near $82) due to Middle East disruptions, while currency and bond markets watch closely for any signs of renewed friction. China’s willingness to talk — combined with its insistence on red lines — suggests a period of intense, high-stakes diplomacy ahead of the March–April summits.

The NPC session will provide further clarity on China’s internal priorities, while the Paris trade talks and Trump-Xi meeting will test whether both sides can translate rhetoric into concrete stabilization measures. For now, Beijing is projecting strength and openness simultaneously — a classic posture designed to manage expectations and protect core interests.

Global financial markets have reacted with what Goldman Sachs Chairman and CEO David Solomon described as a surprisingly “benign” response to the escalating war with Iran, even as oil prices remain volatile and bond markets flash warning signs about inflation.

Speaking at the Australian Financial Review Business Summit on Tuesday, the Goldman Sachs chief said he expected a sharper market correction given the scale of the geopolitical shock.

“I’m actually surprised,” Solomon said. “I think the market reaction has been more benign, given the magnitude of this, than you might think.”

The conflict, now in its fifth day, has sharpened investor focus on energy supply risks after Iran declared the Strait of Hormuz closed and warned that vessels passing through would be targeted. The narrow waterway is one of the world’s most critical oil chokepoints, handling a significant share of global crude exports from the Gulf.

Equities slip, but no rout

U.S. equities have turned volatile but have not experienced panic-driven selling. On Tuesday, the Dow Jones Industrial Average fell 0.83%, the S&P 500 declined 0.94%, and the Nasdaq Composite dropped 1.02%. Futures pointed lower again on Wednesday.

The pullback suggests investors are repricing risk rather than fleeing wholesale from equities. Market participants appear to be weighing two competing forces: the potential for a sustained energy shock that could drive inflation higher, and the possibility that the confrontation may be contained or short-lived.

Solomon said markets will need time to assess the broader economic consequences.

“I think it’s going to take a couple of weeks for markets to really digest the implications of what’s happened both in the short term or in the medium term,” he said.

Bond markets break from safe-haven script

Perhaps more striking than the equity moves has been the behavior of U.S. Treasuries. Yields have been rising, even as geopolitical tensions intensify. Historically, war or severe geopolitical disruptions push investors toward government bonds, lifting prices and lowering yields.

This time, bond prices have fallen, and yields have climbed.

The shift points to inflation anxiety rather than pure risk aversion. Investors are increasingly concerned that higher oil prices could feed into broader consumer prices, complicating the outlook for monetary policy and keeping interest rates elevated for longer.

The reaction points to a recalibration of inflation expectations rather than a rush for safety. In essence, investors appear to be demanding a higher risk premium across asset classes.

“The one thing that happens for sure whenever you have an event like this is people want a higher risk premium for any kind of risk asset they’re in, and so people start repricing things at the margin. And certainly we’re seeing that,” Solomon said.

Oil stabilizes after White House intervention

Oil markets have been at the center of investor concern. International benchmark Brent crude for May delivery rose 2.7% to $83.58 per barrel on Wednesday, while U.S. West Texas Intermediate futures for April climbed 2.3% to $76.26.

Prices had surged earlier in the week after Iran’s threat to maritime traffic through the Strait of Hormuz. However, they steadied toward the end of Tuesday’s session after U.S. President Donald Trump said the United States would provide insurance to tankers operating in the Persian Gulf to help restore maritime flows.

Trump acknowledged the risk of elevated energy costs, saying the war may result in “high oil prices for a little while,” but added that he expected prices to fall once the conflict subsides.

Energy strategists have warned that if the Strait of Hormuz were shut for a prolonged period, oil prices could surge above $100 per barrel. Such a move would significantly raise global inflation risks, particularly for energy-importing economies in Europe and parts of Asia.

Key variables: duration and transmission

For financial markets, the decisive factors will be duration and transmission.

Solomon outlined several open questions: “Does this become a more prolonged thing? Does it start to filter through to energy supply chains? Does it have other impacts that affect consumer sentiments [and] consumer behaviors in different parts of the world?”

If energy flows remain intact and price spikes prove temporary, markets may absorb the shock with limited long-term damage. But a sustained disruption could alter inflation trajectories, corporate earnings forecasts, and central bank policy paths.

A prolonged supply shock would likely lift transport and manufacturing costs, squeeze household purchasing power, and weigh on consumer confidence. In that scenario, equity valuations — particularly in rate-sensitive growth sectors — could come under greater pressure, while bond yields might remain elevated on inflation concerns.

At the same time, energy producers and defense stocks could benefit from higher commodity prices and increased geopolitical risk premia.

Repricing, not panic — for now

The broader market tone suggests recalibration rather than capitulation. Investors are demanding compensation for uncertainty but are not yet pricing in a worst-case energy shock.

The absence of a sharp flight to safety indicates that many participants are betting on containment, diplomatic de-escalation, or at least limited disruption to oil shipments.

Still, as Solomon indicated, markets lack sufficient data to assess the medium-term economic impact. In previous geopolitical crises, initial calm has sometimes given way to sharper adjustments once economic data begin to reflect higher costs and slower activity.

Inflation in the euro area accelerated unexpectedly in February, complicating the policy calculus for the European Central Bank at a time when geopolitical tensions in the Middle East threaten to reignite energy-driven price pressures.

Data published Tuesday by Eurostat showed annual consumer price growth across the 21-member currency bloc rose to 1.9% from 1.7% in January, exceeding expectations for an unchanged reading. The increase was largely driven by higher unprocessed food prices and a renewed uptick in services inflation, even as energy prices had not yet fully reflected the latest surge in oil markets.

More troubling for policymakers, core inflation — which excludes volatile food and fuel components — climbed to 2.4% from 2.2%. Services inflation, closely linked to wage dynamics and domestic demand, once again surprised to the upside.

The rebound interrupts a period in which inflation had been gradually moderating toward the ECB’s 2% target and raises questions about how resilient that disinflation trend truly is.

Energy Shock Risk Looms Larger

February’s data likely predate the full inflationary impact of recent Middle East hostilities, which have pushed oil and gas prices higher and weakened the euro against the dollar. Economists quoted by Reuters warn that the next rounds of data could reflect stronger energy pass-through.

“February’s higher than expected inflation figure are certainly not good news and add to concerns resulting from the start of the conflict in the Middle East,” said Diego Iscaro at S&P Global Market Intelligence. “Higher oil and gas prices, supply chain disruptions and a softer euro are all inflationary,” he added.

Europe remains structurally vulnerable to external energy shocks. Although dependence on Russian pipeline gas has declined since 2022, the region still relies heavily on imported liquefied natural gas and crude oil. Shipping disruptions, higher insurance costs, and rerouted energy flows can quickly filter into wholesale markets.

Fuel retailers in many eurozone countries adjust prices within days of wholesale changes, meaning the transmission from crude price movements to pump prices is often swift. Analysts at JPMorgan Chase estimate that a 10% increase in Brent crude prices in euros would lift headline inflation by roughly 0.11 percentage points within three months. Based on recent market moves, that could add around 0.2 percentage points to inflation if prices stabilize at current elevated levels.

Such an increment may appear modest, but it becomes significant in a policy environment where inflation was projected to fall below target in 2026 and 2027.

Core Pressures and Wage Dynamics

The rise in core inflation to 2.4% underscores a more persistent concern. Services inflation is closely tied to labor costs, and wage growth across several euro area economies has remained elevated following tight labor market conditions.

If higher energy prices seep into wage negotiations — either through direct cost-of-living adjustments or indirect expectations — the ECB could face a more entrenched inflation cycle. Policymakers are particularly attentive to negotiated wage settlements in Germany, France, and Italy, which heavily influence the bloc’s aggregate inflation path.

Unlike energy shocks, which central banks often treat as temporary supply disturbances, wage-driven inflation can become self-reinforcing.

ING economist Bert Colijn said risks are clearly skewed to the upside. “If the conflict continues for a few weeks, expect inflation to rebound to the mid-2% range,” he said. “But if a significant disturbance to energy supply lasts longer, the impact is bound to become larger, which means that uncertainty around the inflation outlook is returning.”

ECB’s Delicate Balancing Act

The ECB’s deposit rate stands at 2%, and markets currently expect no immediate change. Derivatives pricing suggests roughly a 50% probability of a rate hike later this year, reflecting heightened uncertainty rather than a firm consensus.

The central bank has historically looked through short-term energy volatility, arguing that monetary policy operates with long lags and cannot offset temporary commodity price spikes. However, policymakers may be more cautious this time. In 2022, the ECB was late to recognize the persistence of inflation and subsequently had to tighten policy at an unprecedented pace.

That experience has left officials wary of underestimating supply shocks.

At the same time, eurozone growth remains fragile. Manufacturing activity in Germany has struggled, and broader economic momentum is subdued. Raising rates in response to an externally driven energy shock could further dampen already weak demand.

This trade-off — inflation risk versus growth vulnerability — lies at the heart of the current policy dilemma.

Financial Markets and Currency Impact

The euro’s depreciation against the dollar amplifies imported inflation. Since energy commodities are largely dollar-denominated, a weaker euro raises the local currency cost of oil and gas, even if global prices remain stable.

Bond markets have reacted cautiously, with yields edging higher as investors reassess the trajectory of monetary policy. Equity markets remain sensitive to energy price swings, particularly in energy-intensive sectors such as chemicals, transport, and heavy industry.

If inflation expectations begin to drift upward — whether measured through market-based indicators or consumer surveys — the ECB could face pressure to reinforce its anti-inflation credibility.

The ECB’s next policy meeting is scheduled for March 19. A rate change appears unlikely at that meeting, as the bank typically acts only on evidence of sustained changes in financial conditions or inflation expectations.

However, communication will be critical. Policymakers may signal increased vigilance regarding second-round effects, particularly wage settlements and services inflation, while emphasizing that temporary energy volatility alone does not automatically warrant tighter policy.

The baseline scenario remains one where the ECB holds steady if the energy shock proves contained and inflation expectations remain anchored. But if the Middle East conflict prolongs disruptions, pushing oil and gas prices materially higher, the central bank could be forced to revisit its stance sooner than previously anticipated.

For now, February’s data serve as a reminder that eurozone inflation remains sensitive to geopolitical shocks. What had looked like a stable glide path toward target now carries renewed uncertainty — and a policy debate that may intensify in the months ahead.