LONDON, March 26, 2026, 11:37 GMT
Oil surged past $105 a barrel, while London’s FTSE dropped over 1% on Thursday. Iran’s response—reviewing a U.S. proposal to halt the war but refusing dialogue—reversed some of the previous session’s gains. “Ongoing military escalation” and limited tanker movement are keeping energy markets tight, MUFG’s Soojin Kim noted. Reuters
This shift is hitting Americans both at the pump and in the outlook for borrowing costs. AAA put the national average for regular gas at $3.981 per gallon on March 26—nearly a dollar higher than four weeks prior. Traders now see no room for a Fed cut this year, and speculation about a possible ECB rate hike next month has resurfaced.
That bounce didn’t hold for long. Brent closed Wednesday at $102.22, while the S&P 500 added 0.54% on hopes that Tehran might still be considering Washington’s 15-point offer. By Thursday, though, South Korea’s KOSPI had fallen 3.2%, Hong Kong’s Hang Seng slipped 1.9%, and futures for Wall Street turned negative again.
Right now, the Strait of Hormuz—responsible for moving roughly a fifth of global crude and LNG—has become the main risk factor for markets. Barclays estimates a sustained shutdown could wipe 13 million to 14 million barrels per day off the market, with total oil demand sitting around 104 million to 105 million barrels daily. If that kind of disruption drags into late April or May, the bank says 2026 Brent prices could climb back into the $100 to $110 range.
This is the inflation problem laid bare. BlackRock CEO Larry Fink flagged the risk: oil at $150 spells “global recession.” On Thursday, the OECD chimed in, saying extended shutdowns of production sites or blockages at Hormuz would hit harder than markets anticipate, potentially pushing G20 inflation to 4% in 2026. Reuters
Some firms are seeing big gains. Venture Global’s stock has jumped over 70% since the start of the conflict. Cheniere Energy has climbed 25%. Shell, too, is ahead of broader energy peers as buyers look for supply lines beyond the Gulf. “If you want an extra ship of U.S. gas in Berlin, you have to bid high enough to divert it away from Tokyo,” said Bernstein’s Irene Himona. Reuters
Investors had already received a warning. Iran’s strike on Qatar’s Ras Laffan gas complex last week sent stocks and bonds sliding, rattled by worries about a persistent energy shock. Still, plenty of fund managers kept positioning for Brent to finish the year well under where it sits now—a clear sign that many are wagering the price surge will lose steam, not set in.
Still, there’s a chance markets aren’t fully pricing in the impact. According to JPMorgan, a persistent 10% oil jump knocks about 15 to 20 basis points off GDP. Michael Arone, chief investment strategist at State Street Investment Management, notes investors appear to expect any disruption to wrap up in weeks rather than dragging on for months. Should that outlook flip, expect a reset across earnings forecasts, rate expectations, and consumer spending.
Traders face a tug-of-war: diplomatic news on one side, tight supply that hasn’t eased on the other. Governments in places like South Korea and the Philippines have started emergency actions. Over in Houston, executives gathered this week and put the shortfall from Middle Eastern suppliers at up to 20 million barrels a day — and that’s with reserve releases at historic highs.
