Oil Prices

The S&P 500 stayed on track for its fourth straight weekly gain, the longest streak since October 2024, as reports emerged of Trump sending envoys to Pakistan for weekend talks with Iran's foreign minister. US crude dropped to $93 per barrel on reduced tensions, while futures jumped across indices with Dow e-minis up 171 points and Nasdaq 100 e-minis gaining 155 points in pre-market trading. The rally builds on recent record highs despite inflation risks, with Goldman noting 2026-2027 EPS estimates up 4 percent since late January. Bond yields fell after Justice Department closed its probe into Fed Chair Powell, boosting rate cut bets and Kevin Warsh confirmation odds.

Trump extended the Iran ceasefire while maintaining naval blockades, sending oil prices into whipsaw trading around $82 per barrel. Peace talks have stalled over sanctions relief, with Iran demanding full lifting before any nuclear concessions. The market's muted response suggests traders expect this truce to fracture within weeks rather than months. Dollar weakness and steady gold prices indicate investors are hedging for renewed Middle East volatility, not celebrating diplomatic progress.

Twenty percent of global oil flows through the Strait of Hormuz, and Iran just shut it down again. European gas futures jumped 12 percent overnight after Iranian forces seized what Trump claims was a US-flagged vessel, prompting immediate retaliation. The arithmetic is brutal: every day the strait stays closed costs global trade roughly $2.8 billion, with energy-dependent European manufacturers taking the first hit. Short oil volatility positions are now underwater, and anyone betting on lower energy prices through Q1 just got reminded why geopolitical risk premiums exist.

Senior Indian government officials privately estimate a full Iran conflict could push oil to $150 per barrel, matching the economic disruption of Covid lockdowns. India imports 85 percent of its crude oil, making it uniquely vulnerable to Middle East supply shocks. The government has quietly accelerated talks with Russia and Venezuela for alternative supplies, despite Western sanctions pressure. A sustained oil spike above $120 would force the Reserve Bank of India to choose between controlling inflation and supporting growth.

Japan's 10-year government bond yield just spiked to 2.49% — the highest since 1997 — while the 40-year hit 4% for the first time ever as Trump's naval blockade of the Strait of Hormuz sends oil to $90 per barrel. The Bank of Japan faces an impossible choice: raise rates to defend the yen (now at 160 per dollar) and risk a debt crisis, or keep rates low and watch currency collapse accelerate. With Japan's debt-to-GDP ratio above 236%, any policy response threatens to destabilise either currency or bond markets. The Nikkei already fell 12% in a single day from a modest BOJ signal, and Goldman Sachs warns this energy shock represents "the largest supply disruption in history."

Keir Starmer's pledge to boost living standards just collided with Middle Eastern reality. The Iran conflict will leave typical UK households £500 worse off this year as food inflation rockets to 9-10% by year-end — triple the pre-war forecast of 3%. The OECD slashed UK growth to 0.7% and warned inflation will hit 4% in 2026, undermining expectations of Bank of England rate cuts. The Strait of Hormuz disruption affects 25% of global oil and 20% of LNG shipments, but Britain's vulnerability stems from what the OECD calls "years of failure" in energy resilience that left the country dangerously exposed.

China's stocks and bonds are moving together for the first time in two years — and that's the point. Jefferies' Christopher Wood is telling clients Chinese mainland equities are "the best to own in the world" during the Iran conflict because they're least exposed to oil-dependent economies. While US stocks suffered their longest weekly losing streak since 2022, Chinese assets benefited from haven flows and the prospect that elevated oil prices will finally turn China's Producer Price Index positive, ending deflation. The synchronised rally reflects a fundamental shift: investors are treating Chinese assets as a unified safe haven rather than traditional risk-on plays.

Brent crude plunged 13% to around $95 per barrel following Trump's Iran ceasefire announcement, marking the steepest oil drop since the 1991 Gulf War. The selloff reflects hopes Iran will reopen the Strait of Hormuz, which handles 25% of maritime oil trade, though analysts warn shipping companies need stronger assurances before resuming tanker operations. US gasoline remains elevated at $4.16 per gallon, up from $2.98 before the conflict, while Middle Eastern producers had cut 7 million barrels daily in March.

S&P Global cut the Philippines' outlook to stable from positive, citing heightened risks to the country's balance of payments and fiscal position from the Iran war. The Philippines declared the world's first state of energy emergency as oil prices above $80 per barrel threaten to push Q2 GDP growth below 3%. The peso has weakened toward 60 per dollar despite central bank intervention, while inflation at 2.4% has room to rise within the 2-4% target band.

President Trump argued the US imports "almost no oil" through the Strait of Hormuz and urged NATO allies to reopen the waterway themselves, despite gasoline averaging over $4 per gallon nationwide. While EIA data shows the US imports about 7% of crude from the Gulf, analysts warn global market shocks still impact American consumers through interconnected pricing and supply chains, calling Trump's stance "hollow" leverage against reluctant allies.

Brent crude plunged to $92 from record highs above $144, marking the largest single-day drop since 1991's Gulf War, after President Trump agreed to a two-week ceasefire that reopens the Strait of Hormuz. The Pakistan-mediated deal suspends US strikes on Iranian infrastructure in exchange for coordinated safe passage through the vital shipping lane. Iran claims victory whilst agreeing to halt defensive operations, though missile launches continued post-announcement. The reprieve ends five weeks of supply disruption affecting 20% of global oil trade.

Asian stocks surged 0.7-8% with oil dropping below $100 as ceasefire hopes spread, but strategists warn the rally depends entirely on Hormuz reopening. Iran earns $139 million daily from oil exports during the crisis, creating financial incentives to prolong closure despite diplomatic pressure.

Brent crude's 60% surge to $104.63 since the Iran war began could persist even after fighting ends if the Strait of Hormuz remains unstable, according to Homin Lee at Lombard Odier. The strategist noted that 15 ships have passed through with Iran's permission, but sustained $100+ oil requires only the threat of closure, not active blockade. With 80% of Hormuz flows heading to Asia, energy-importing economies face prolonged stagflation risks that could outlast any military resolution.

Philippine inflation surged to approximately 3.8% in March, the fastest pace in 20 months, as oil prices climbed 40% month-on-month and the peso hit record lows near 61 to the dollar. The central bank warned inflation could breach the 4% target ceiling, with every $10 oil increase widening the current account deficit by 0.3-0.4% of GDP. The World Bank estimates household incomes could fall 3.3% if oil stays 60% above 2025 levels, threatening the Philippines' energy-import dependent economy as Middle East supply disruptions persist.

Saudi Aramco raised its flagship Arab Light crude price for Asian buyers to a record $19.50 per barrel premium above regional benchmarks, responding to Iran's near-closure of the Strait of Hormuz. The hike was lower than the $40 premium traders expected, but Brent has still surged over 50% year-to-date with 180 million barrels disrupted so far according to Aramco's CEO. OPEC+ agreed to raise output by 206,000 barrels daily starting May, but repairs to damaged infrastructure will be costly and time-intensive.

Asian stocks jumped over 1% and emerging market currencies strengthened on reports of US-Iran ceasefire discussions, with 15 ships reportedly passing through the Strait of Hormuz with Iranian permission. Thai shares led gains at 2.3% while crude oil pared earlier advances. Markets remain volatile: the MSCI Emerging Markets Index had wiped out all 2026 gains in March's sharpest monthly decline since 2020. US gasoline prices hitting $4.11 per gallon could push March CPI up 1%, the most since the post-pandemic surge.

Brent crude surged over 1% to above $111 per barrel as Trump's escalation threats offset reports of intense negotiations with Iran through multiple channels. US gasoline prices hit $4.11 per gallon, up 13 cents from last week and the highest since 2022. Eight OPEC+ nations agreed to boost May production by an undisclosed amount, but availability remains uncertain if the Strait remains blocked. Trump's zigzagging between war threats and peace talks is creating whiplash in energy markets, with one trader noting prices could easily spike above $120 if Tuesday's deadline passes without resolution.