By Anna Szymanski
April 17 (Reuters) –
Everything Mike Dolan and the ROI team are excited to read, watch and listen to over the weekend.
From the Editor
Hello Morning Bid readers!
If the biggest Middle East conflict in decades – complete with the disruption of more than 600 million barrels of oil and the largest monthly Brent crude price spike ever – couldn’t deal lasting damage to global markets, perhaps nothing can.
Wall Street has already erased the damage clocked early in the conflict, with U.S. stocks back to pre-war levels after an almost 10% round trip in just six weeks – a shorter ride than the eight-week, post-Liberation Day rollercoaster last year.
That comes amid rising hopes for a conclusion to the Iran war.
The week got off to a rocky start on that front after failed peace talks last weekend. President Trump announced on Sunday that the U.S. would impose a blockade on traffic to and from Iranian ports through the Strait of Hormuz – as well as on ships paying tolls to Iran. Trump has followed through, and oil markets are clearly hoping this Hormuz countermove proves to be another example of the president’s “escalate to de-escalate playbook”.
The squeeze on Iran’s revenue does appear to be having an impact. A source told Reuters that Iran might let ships sail freely through the Omani side of the strait under proposals it has offered in talks with the U.S., providing a deal is agreed to prevent renewed conflict.
Other signals are looking positive. Trump said talks between the two sides could take place this weekend and that the two-week ceasefire, set to expire next week, could be extended – if a deal isn’t agreed beforehand. Meanwhile, news also came yesterday of a 10-day ceasefire between Israel and Lebanon.
A peace deal isn’t a given, of course. That uncertainty was reflected in markets on Thursday as oil prices rose again, with Brent crude approaching the $100-per-barrel level, though these gains were pared back early on Friday.
Elsewhere, macro forecasters appear to be betting that the wounds from this conflict won’t run too deep. As world leaders met in Washington, DC this week for the International Monetary Fund (IMF) and World Bank Spring Meetings, the IMF’s reference forecast left global GDP growth for 2027 unchanged at 3.2%. Granted, it also cut its 2026 outlook and warned of drifting toward an ‘adverse scenario’. But for now, it’s assuming a short-lived war.
Oil futures are also fairly sanguine. While Brent crude futures are still around 10-15% higher than before the war, the curve indicates that long-term pain from one of the biggest energy supply crises in history won’t be severe.
However, this doesn’t jibe with what is being seen in the physical market, where prices are far higher. This disconnect is forcing consumers, companies and policymakers to navigate today’s choppy energy environment without a reliable compass – and that could leave a lasting scar on the global economy.
Indeed, the conflict has already caused significant damage that won’t be easily fixed.
For one thing, the Iran war and the closure of the Strait of Hormuz have shattered a status quo that prevailed among Middle East oil and gas producers for decades. The uneasy “new normal” may just be setting the stage for more fighting.
Meanwhile, European holidaymakers may be forced to rethink their plans this summer as airlines brace for possible flight groundings amid the fuel supply crunch. A downturn in European summer travel could take a bite out of the continent’s growth, making this crisis yet another serious wake-up call for a region already grappling with energy security.
Stateside, Trump has signalled that gasoline prices could remain near or above current levels of around $4 a gallon through the U.S. midterm elections in November. That could have real political consequences, but one industry may benefit: high prices at the pump appear to be spurring renewed interest in electric vehicles in the U.S.
As a reminder, oil and gas are not the only commodities being impacted by this conflict. The Iran war is triggering an unprecedented crisis in the global aluminium market, with potentially devastating knock-on effects across sectors as diverse as construction, packaging, transport and green energy.
Despite all this, what the Wall Street six-week round trip teaches us is that markets are simply becoming more resilient to shocks. This “escapism” – as some have called it – is understandable, even logical, when we remember investors’ buy-the-dip tendencies, the apparent reliability of the “TACO” trade, the AI investment boom, and earnings that seem to rarely disappoint.
Speaking of earnings, big U.S. banks kicked off the first-quarter reporting season this week, and results were mostly strong. With Tesla reporting next week – the first of the “Magnificent 7” out of the gate – focus will turn to whether the energy price shock and supply chain woes in Asia have impacted the outlook for the AI boom. One growing argument is that tech companies could actually turn out to be the biggest winners from rising geopolitical tensions.
Finally, while all eyes have been on the Middle East in the past two months, China has quietly released a string of positive economic data points – including hitting 5% GDP growth last quarter. True, exports dropped last month, largely because of the war, but there are signals that the property crisis may soon be bottoming out. For Beijing, this couldn’t come at a better time.
What’s more, China continued adding to its crude stockpile – the world’s largest – in March, even as the rest of Asia struggled to offset the loss of Middle Eastern supply. The question now is how quickly China will tap those reserves if the Strait of Hormuz remains closed.
For more data-driven insights on markets and commodities, check out Reuters Open Interest. You can learn:
• Which countries is China tapping to replace the energy imports currently trapped in the Middle East?
• How can investors participate in what appears to be a burgeoning commodities supercycle?
• Why should investors care about Viktor Orban’s electoral defeat in Hungary?
• How might Australia’s green steel industry benefit from the Iran war?
• Why is U.S. coal’s recent reprieve likely to be a mirage?
I’d love to hear from you, so please reach out to me at .
This weekend, we’re reading…
MIKE DOLAN, ROI Finance & Markets Columnist: A new paper by Brookings Institution fellow Gian Maria Milesi-Ferretti examines the return of global imbalances as a major world concern. He concludes that rising current account deficits can be benign if driven by technological investment that yields productivity gains, but warns the deteriorating U.S. fiscal outlook poses the biggest risk.
ANDY HOME, ROI Metals Columnist: Amanda van Dyke, founder of the Critical Minerals Hub, offers an insight on sulfur as another supply chain casualty of the Iran war. She argues that despite sulfur underpinning the global economy, its increasingly fragile supply chain is going largely unnoticed.
CLYDE RUSSELL, ROI Asia Commodities and Energy Columnist: This article from Rystad Energy analyzes how Asian cooperation could build energy resilience amid the current crisis, with practical data on fuel-switching options and a clear-eyed view of the supply challenges ahead.
We’re listening to…
RON BOUSSO, ROI Energy Columnist: This BBC Americast podcast offers an insight into U.S. Defense Secretary Pete Hegseth and how religion has entered the Pentagon since he took over.
And we’re exploring…
GAVIN MAGUIRE, ROI Global Energy Transition Columnist: This newly released AI platform, Iwfgara, maps wind speeds and directions across the planet, offering detailed representations of wind patterns worldwide. Models like these can help utilities and power traders more accurately predict wind power flows through electric grids.
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Opinions expressed are those of the authors. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Anna Szymanski)
