Oil Jumps, Risk Sentiment Turns Cautious on Rising U.S.–Iran Tensions
Markets opened the week on a cautious note as renewed tensions between the U.S. and Iran weighed on global risk appetite. Over the weekend, developments around the Strait of Hormuz escalated, with Iranian officials stating that continued U.S. actions are undermining peace talks, while also reaffirming that key issues like uranium enrichment and missile capabilities remain non-negotiable.
Energy markets reacted sharply. Brent crude surged 5.7% to $95.50, driven by fears of supply disruptions after Iran reportedly closed the chokepoint again and accused the U.S. of violating a ceasefire by targeting a commercial vessel. European natural gas prices also spiked up to 11%, reflecting rising concerns over energy security.
On the equity side, sentiment turned defensive. S&P 500 futures fell 0.6%, while European equities were set to open lower by around 1.2%. This comes after a strong rally last week, where the index recorded its third consecutive weekly gain and approached its strongest monthly performance since 2020.
In fixed income, U.S. 10-year Treasury yields edged up to 4.27%, signaling some pressure from inflation and risk repricing. Meanwhile, gold slipped 0.8% despite geopolitical tensions, suggesting some profit-taking after recent highs, while Bitcoin traded slightly lower near $74,500.
In Asia, central bank policy remained steady, with the PBoC holding both its 1-year and 5-year loan prime rates unchanged, indicating a stable but cautious economic stance amid global uncertainty.
Overall, markets are shifting from optimism to caution, with geopolitical risks—particularly around the Strait of Hormuz—now back at the center of investor focus. Energy volatility and headline risk are likely to remain key drivers in the near term.
By Amir Amidian
Senior Market Analyst | Zylostar
