Oil prices climbed above $110 per barrel on Tuesday, driven by U.S. President Donald Trump’s deadline for Iran to reopen the Strait of Hormuz or face military action. Trump warned of strikes on Iranian power plants and bridges, promising to unleash “hell” on Tehran if the strait—a vital shipping route—remains closed past 8 p.m. ET Tuesday (1 a.m. BST Wednesday).
Geopolitical Tensions Escalate
Iran rejected a U.S. ceasefire proposal mediated by Pakistan, demanding a permanent end to the conflict. The standoff has blocked a key chokepoint through which one-fifth of global oil and gas flows during normal operations, causing the most severe energy supply disruption on record.
Market Reactions
Brent crude advanced 1.1% to $111.01 per barrel, while New York light crude jumped 2.6% to $115.3. Asian markets showed mixed results: Japan’s Nikkei rose 0.19%, South Korea’s Kospi gained 1.2%, and Hong Kong’s Hang Seng dipped 0.7%.
IMF Warns of Economic Fallout
The Middle East conflict will fuel higher inflation and curb global growth, according to IMF Managing Director Kristalina Georgieva. Even a quick resolution won’t prevent downward revisions to growth forecasts and upward adjustments to inflation outlooks in the lender’s upcoming report. “Even if the conflict is swiftly resolved, the IMF is set to reduce its forecast for economic growth and lift its outlook for inflation,” Georgieva stated.
UK Auto Sales Rise Amid EV Push
New car registrations in the UK increased about 6% in March, a peak month for sales, based on initial industry figures. Battery electric vehicle sales hit a record, though their 23% market share falls short of the government’s 33% target for the year. Industry leaders urge a review of the EV transition as war-driven gas price spikes push up electricity costs.
Analyst Insights
“The markets are back on a Trump-imposed countdown clock,” said Kyle Rodda, senior financial market analyst at Capital.com. “To use a sporting analogy, it’s red time, and the result could go either way.” He described a binary outcome: escalation could spike energy prices, strengthen the U.S. dollar, and pressure equities, while de-escalation might trigger a relief rally. Despite some positive signals, hawkish rhetoric from both sides leaves ceasefire prospects dim, roughly 27 hours from the deadline.
Upcoming Economic Data
- 8:45-9 a.m. BST: Italy, France, Germany, eurozone S&P Global PMIs (final) for March
- 9 a.m. BST: UK new car sales for March
- 9:30 a.m. BST: UK S&P Global PMI for March
- 1:30 p.m. BST: US durable goods for February
