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Friday, April 03, 2026
What’s happening: Crude oil prices rose sharply as investors re-assessed the magnitude of supply risks from the ongoing Middle East war.
What happened: US President Trump pledged to increase attacks on Iran over the next weeks if the ceasefire conditions are not accepted.
Meanwhile, Iran is preparing a protocol with Oman to monitor traffic through the Strait of Hormuz.
Why it matters: The ongoing conflict in the Middle East entered its fifth week, lifting energy prices after Iran closed the Strait of Hormuz route, which is responsible for transiting 20% of global oil and LNG (liquefied natural gas).
On Tuesday, Trump had indicated that troops would leave Iran soon, even if no deal is reached. During his prime-time speech, the US President said that the country’s “core strategic objectives” in the ongoing war were close to being achieved.
However, Trump also warned of severe strikes on Iran over the next two to three weeks, including potential strikes on civilian infrastructure in case no deal is reached.
Meanwhile, Oman and Iran are preparing a toll for tankers through the Hormuz chokepoint.
The UK is hosting a virtual meeting of about 40 nations to discuss options on securing the route, while the US is unlikely to participate.
Data released on Wednesday showed US crude inventories surged by 5.5 million barrels to 461.6 million barrels during the week ended March 27, versus market estimates of a gain of 814,000 barrels. US gasoline stockpiles declined by 0.6 million barrels to 240.9 million barrels, versus expectations of a decline of 1.9 million barrels, while distillate stockpiles declined by 2.1 million barrels to 117.8 million barrels, compared to expectations of 0.6 million barrels.
The conflict has triggered a sharp gain in crude oil prices, raising inflation concerns, which resulted in investors scaling back speculations of interest rate cuts by the Federal Reserve this year.
Weakness in the US dollar lent further support to oil prices, as a softer greenback makes commodities cheaper for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, edged lower to 100.02 this morning.
Spot prices for WTI crude oil jumped 13.1% to $112.42 per barrel, while Brent prices gained 8% to $112.77 per barrel.
In other energy trading, gasoline rose 6.1% to $3.2790, while heating oil jumped 9.2% to $4.4298. Natural gas bucked the trend, slipping 0.4% to $2.807.
What to watch: Investors will keep an eye on the developments related to the conflict in the Middle East.
Markets will also focus on OPEC+ (Organization of the Petroleum Exporting Countries and its allies), which is expected to consider a further increase in oil output on Sunday.
Context: China’s CSI 300 index traded slightly lower this morning as investors digested the latest economic data.
Details: Data released this morning showed that China’s RatingDog general services PMI fell to 52.1 in March from around a three-year high of 56.7 in the previous month. The latest reading came in below market estimates of 53.7 and marked the slowest services growth in three months.
China’s RatingDog general composite PMI declined to 51.5 in March from February’s 33-month high of 55.4. Despite the latest decline in PMI, the reading remained mostly in-line with two-year averages.
Markets are hoping for the reopening of the Strait of Hormuz after Iran and Oman said they are preparing a protocol for monitoring transit through the waterway, which is expected to ease some regional tensions.
Meanwhile, countries including India and the Philippines are actively in talks with Iran to ensure the safe passage of vessels. China and Pakistan have proposed a five-point initiative to restore peace in the Middle East.
The CSI 300 index fell 0.1% to 4,474.42 this morning, while the Shanghai Composite index dipped 0.54% to 3,898.20. Shares of BYD, Bank of China and Industrial and Commercial Bank of China were among the top losers this morning.
Meanwhile, the USD/CNY forex pair fell around 0.1% to 6.8805.
What to watch: Investors will continue monitoring the ongoing Middle East war, which is expected to impact Chinese markets ahead.
Data on inflation rate and PPI will be released next week on Friday. China’s annual inflation, which accelerated to 1.3% in February from 0.2% in the previous month, is expected to ease to 1.1% in March. China’s producer prices, which declined 0.9% year-over-year in February, following a 1.4% fall in the previous month, are expected to decline by 1% in March.
Other Markets: US trading indices closed mixed on Thursday, with the S&P 500 and Nasdaq 100 up by 0.11% each, and the Dow Jones index down by 0.13%.
Russia and Ukraine are negotiating for another exchange of prisoners of war ahead of Easter. The news sent the USD/RUB pair higher in forex trading this morning.
South Korea’s foreign exchange reserves declined to $423.7 billion at the end of March, from $427.6 billion in the previous month, lending support to the USD/KRW forex pair.
Japan’s S&P Global composite PMI was revised slightly higher to 53.0 in March from a flash reading of 52.9. The latest reading still came in below February’s 33-month high of 53.9, which sent the USD/JPY pair higher in forex trading this morning.
Singapore’s manufacturing PMI slipped to 50.5 in March from 50.6 in the previous month, lending support to the USD/SGD forex pair.
Canada’s trade deficit widened to C$5.7 billion in February from C$4.2 billion in January. The latest reading coming in worse than market estimates of C$2.3 billion sent the USD/CAD pair higher in forex trading this morning.
India’s bank loan growth (1530 UAE Time), deposit growth (1530 UAE Time) and foreign exchange reserves (1530 UAE Time), as well as US nonfarm payrolls (1630 UAE Time), unemployment rate (1630 UAE Time), average hourly earnings (1630 UAE Time), participation rate (1630 UAE Time), government payrolls (1630 UAE Time), manufacturing payrolls (1630 UAE Time), nonfarm payrolls private (1630 UAE Time), average weekly hours (1630 UAE Time), U-6 unemployment rate (1630 UAE Time), S&P Global composite PMI (1745 UAE Time) and S&P Global services PMI (1745 UAE Time).
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