London, March 4, 2026, 08:15 GMT
- Brent crude climbed above $84, with investors watching for potential disruption in the Strait of Hormuz.
- Asian stocks slid deeper, with South Korea halting trading for a short stretch after a steep decline.
- Banks are cautioning that extended disruption may dampen output and make it tougher to execute rate-cut plans.
Stocks around the world struggled again Wednesday, with oil climbing as fighting between the U.S., Israel, and Iran rattled supply chains and raised the risk of tankers steering clear of the Strait of Hormuz. Brent crude, the international yardstick, jumped 3.3% to $84.07 a barrel by 0659 GMT, while U.S. West Texas Intermediate put on 3% to reach $76.80. In Iraq, officials said output dropped by close to 1.5 million barrels per day, citing full storage and export blockages. “Only clear signs of de-escalation” would put a lid on the surge, OANDA’s Kelvin Wong said. President Donald Trump suggested U.S. Navy escorts and government-backed insurance to shield Gulf shipping from war-linked losses. 1
The Strait of Hormuz, a slim waterway linking the Persian Gulf and Gulf of Oman, handles about 20% of global oil and LNG flows. Any significant interruption here feeds straight into inflation and growth numbers. Goldman Sachs bumped its second-quarter Brent oil price target up by $10, now projecting $76 per barrel. Analysts also flagged the risk of Brent hitting $100 if traffic through Hormuz remains unchanged for another five weeks. 2
Inflation jitters are shifting market views: traders now peg just a 29% chance of a Bank of England rate cut on March 19—slashed from last week’s 80%—after a surge in energy costs. The FTSE 100 tumbled 2.75% Tuesday. Month-ahead UK gas? Up 30%, settling at 148 pence a therm, adding to Monday’s steep climb, according to the Guardian. Jemma Slingo, investment specialist at Fidelity International, flagged the risk: “Stubbornly high oil and gas prices could be inflationary and disrupt plans to cut interest rates.” Jess Ralston from the Energy and Climate Intelligence Unit said households remain “dangerously underprepared” for another shock. 3
Wednesday in Asia saw South Korea’s Kospi nosedive up to 12%—triggering a brief trading halt. The Nikkei in Tokyo shed 3.9%. Over in China, the CSI 300 eased 1.3%. India’s Nifty 50 gave up 2%. After being closed since Saturday’s strikes, Dubai’s main index slid 4.7% in early hours, Abu Dhabi’s was down 3.5%. Goldman Sachs CEO David Solomon suggested markets could need “a couple of weeks” to process the operation. Brad Cooper of U.S. Central Command said 17 Iranian ships had been destroyed, with “not a single Iranian ship” active in Gulf waters. 4
STOXX 600 shares tumbled over 3% Tuesday in Europe, with banks and insurers posting the steepest drops as traders treated the oil surge as a drag on demand, not a boon. HSBC lost 5.2%. Travel names slumped as well: Lufthansa shed 4%, IAG, which owns British Airways, gave up 5.4%. “Any ceasefire for now looks like a remote possibility,” noted Lindsay James, investment strategist at Quilter, who also warned extended oil gains could cloud the outlook for interest rates. 5
Physical flows remain shaky. On Tuesday, the Suezmax tanker Pola made an unusual transit through the strait, bound for Jebel Dhanna in the UAE to pick up a cargo of Abu Dhabi Murban crude headed for Thailand, according to two trade sources and shiptracking data. The vessel cut its AIS signal as it neared the strait, resurfacing off Abu Dhabi the following day. Crude tanker transits dropped sharply to just four on March 1, per Vortexa figures reported by Reuters, a steep dive from the 24-per-day average seen since January. 6
The danger at sea isn’t hypothetical. According to United Kingdom Maritime Trade Operations, a ship’s master reported being hit by an unidentified projectile just seven nautical miles east of Fujairah, UAE—steel plating took the damage, but the crew remained unharmed and there was no fire, UKMTO said. 7
Wild price swings have sent traders crowding into derivatives, with futures and options volumes surging to all-time highs. On Monday, investors exchanged a record 12.7 million energy futures and options contracts on ICE, according to Reuters. U.S. diesel futures jumped nearly 12% at settlement. Matt Marshall, president of Aegis Hedging, described producers lining up “in a queue” to secure hedges as the market opened, anxiously watching to see if the strait would remain blocked. 8
A longer closure spells trouble for markets. J.P. Morgan analysts warn Iraq and Kuwait could begin shutting in production within days if the Strait of Hormuz remains shut—potentially slicing 3.3 million barrels per day from supply by the eighth day of conflict. According to the bank, Iraq has around three days before exports stop; Kuwait, about fourteen. Meanwhile, Iranian media cited a senior Revolutionary Guards official claiming the strait is already closed and that Iran would target any ship attempting passage. 9
Trump’s call for escorts might calm nerves if tankers resume, though setting up convoys and getting insurance sorted isn’t quick work. Investors are still gauging how to factor in the chance of broader strikes on energy installations. Right now, oil flows and central bank comments are commanding as much attention as any military shifts.
