Heathrow Airport has indicated that the coming months may bring uncertainty due to the continuing Middle East conflict. In its recent update on passenger traffic, the airport noted it is assisting carriers and travelers in adjusting to restricted airspace. It added that disruptions to worldwide supply chains, including fuel supplies, have not impacted airport functions. The airport plans to track developments and coordinate with authorities and airlines to ensure safe travel for passengers. The U.S. dollar is strengthening amid a widespread shift away from risk in financial markets. The dollar index, measuring the currency against others, rose 0.35% today. The British pound fell by half a cent, reaching just over $1.34. Wholesale gas prices have also increased this morning. The U.S. month-ahead gas contract climbed 9% to 119.50 per therm, the highest since last Tuesday, prior to the announcement of a two-week truce with Iran by Donald Trump. Before the conflict started in late February, gas traded below 80 pence per therm, peaking at 180 pence per therm in mid-March. Analyst Priyanka Sachdeva from Phillip Nova brokerage cautioned that each increment of risk in oil markets imposes inflationary costs on the global economy. Oil trading has shifted firmly into a phase influenced by geopolitics, with prices surging past the key $100 per barrel mark as the U.S. implemented a naval restriction on Iranian vessels transiting the Strait of Hormuz. Both WTI and Brent crude opened higher and are now up nearly 8%. This response highlights the tangible and inherent risks associated with the strait. The trigger followed unsuccessful negotiations facilitated by Pakistan, leading the U.S. to enforce limits on ships to and from Iranian ports. Even the prospect of such measures has prompted a reassessment of risks, illustrating oil’s sensitivity to international tensions. The failure of U.S.-Iran discussions over the weekend resulted in limited declines in Asia-Pacific stock markets. Japan’s Nikkei fell 0.75%, while Hong Kong’s Hang Seng and South Korea’s KOSPI each dropped 1.15%. Michael Brown, senior research strategist at Pepperstone brokerage, observed that although oil prices rose and equities dipped slightly, the market’s overall reaction to the U.S. naval blockade announcement has been moderate, with many seeing it as a bargaining tactic by President Trump. He described the start of the trading week as cautious but noted that the response could have been more severe. The U.S. blockade affects around 20,000 maritime workers stranded in the Gulf for the past six weeks. One seafarer shared last week: ‘I submitted my resignation a month ago. I told the captain I refuse to navigate the strait. It’s purely a matter of safety.’ Good morning, and welcome to our ongoing coverage of business, financial markets, and the global economy. The week begins with heightened tensions in the Middle East following the breakdown of U.S.-Iran negotiations last weekend. President Trump’s warning of a blockade on the Strait of Hormuz has pushed oil prices above $100 per barrel once more, diminishing prospects for a quick resolution. Brent crude, the global standard, increased 7% to $101.88 per barrel, while U.S. crude rose over 8% to $104.69 per barrel, approaching the conflict’s early peaks near $120. The president also directed the U.S. Navy to intercept any vessel that paid fees to Iran for strait passage, aiming to halt Iranian oil exports. Market analyst Tony Sycamore from IG explained that this strategy seeks to compel Iran’s partners and buyers to urge Tehran to reopen the critical waterway, possibly avoiding a prolonged ground engagement. It will likely test Iran’s ties with its top buyer, China, which could lose another 2 million barrels daily after earlier disruptions from Venezuela. The conflict has reduced confidence among the UK’s largest firms to its lowest in six years. A quarterly survey by Deloitte of chief financial officers shows worries over rising energy costs, inflation, and interest rates due to the Middle East situation, hitting levels not seen since the early days of the COVID-19 crisis in 2020. Today’s schedule includes: 2 p.m. BST – OPEC’s monthly oil market report; 3 p.m. BST – U.S. home sales data for March.
