Oil prices rose and stock markets fell due to the Iranian blockade.

It is reported that U.S. President Donald Trump has instructed his aides to prepare for a long-term blockade of Iran. Affected by this news, global crude oil prices rose sharply, while stock markets fell, dealing a blow to market confidence in key technology company earnings reports and the Federal Reserve’s policy decisions.

Brent crude, the global benchmark for crude oil, erased early losses to rise 0.2% to $111.53 a barrel, marking its eighth consecutive trading day of gains. It is reported that this long-term blockade will hinder the transportation of oil and natural gas in the Middle East, effectively closing the Strait of Hormuz — a strait that carries about one-fifth of the world’s oil transportation, and its navigability directly affects global energy supply. The Wall Street Journal pointed out that the core purpose of Trump’s move is to crack down on the Iranian regime’s finances, attempting to force Iran to abandon its nuclear program through this high-risk measure, which Tehran has long refused to compromise on.

In terms of stock markets, the MSCI Asia-Pacific Index fell 0.1%, while U.S. stock index futures saw their gains narrow. Among them, Nasdaq 100 Index futures rose slightly by 0.3%, after once climbing to 0.5%, mainly due to the gradual stabilization of market sentiment following the Wall Street sell-off — the core trigger of this sell-off was market doubts about the return on large-scale artificial intelligence investments.

In the bond market, U.S. Treasury prices fell on Tuesday, with yields climbing to their highest level in several weeks. High oil prices have pushed up market inflation expectations, which in turn have dampened investors’ expectations of an interest rate cut before the Federal Reserve releases its policy statement on Wednesday. Due to a Japanese holiday, spot Treasury bonds were suspended from trading during the Asian session.

The sharp fluctuations at the opening of Asian markets indicate a crucial trading day ahead. On the one hand, large technology companies will release their earnings reports collectively; on the other hand, investors are closely watching the Federal Reserve’s moves to obtain clear clues about the direction of interest rates. In recent weeks, the performance of technology companies has helped global stock markets rebound, successfully erasing the losses caused by the initial stage of the Middle East conflict. Therefore, the earnings reports of major technology giants on Wednesday are crucial to maintaining this rebound momentum.

It is reported that large technology companies, which account for about a quarter of the market value of the S&P 500 Index, are about to disclose their earnings reports intensively: Alphabet, Microsoft, Amazon, and Meta Platforms will release theirs on Wednesday, followed by Apple on Thursday.

There is another important development in the energy market: the United Arab Emirates (UAE) will withdraw from OPEC on May 1st. Choosing to withdraw after 60 years of membership not only deals a major blow to OPEC but also raises concerns about the organization’s future development direction. This decision also once again shows that the Middle East conflict is continuously reshaping the pattern of the global energy market. It is reported that the core reason for the UAE’s withdrawal is its desire to break free from OPEC’s production quotas and flexibly adjust output to obtain a “war premium” to accumulate funds for domestic economic transformation.

The Wall Street Journal added that in several recent meetings (including a discussion held in the Situation Room on Monday), Trump ultimately chose to continue cracking down on Iran’s economy and oil exports by blocking Iranian ports. U.S. officials said Trump believes that other alternative options — whether resuming bombing or withdrawing from the conflict — are riskier than maintaining the current blockade. Earlier, the U.S. Treasury Department has introduced relevant measures prohibiting U.S. individuals or entities from paying security passage fees to Iran for the Strait of Hormuz, further strengthening the blockade.

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