Market Report.
❓ Is it all over?
🧭 Last week, we mentioned that one of the possible outcomes of this war would be Trump unilaterally declaring victory and leaving, whether or not the conflict had ended. This is the scenario we seem to be seeing now.
📰 The Wall Street Journal reported that several advisers to President Donald Trump have recently encouraged him to draft or articulate an “exit plan” from the war with Iran.
⚖️ The concern among these advisers is that a prolonged conflict, rising oil and gas prices, and broader economic effects could erode public support and carry political costs for Trump. The advisers want Trump to present a path out that maintains the narrative of success (e.g., damage to Iran’s capabilities) while avoiding an open-ended war.
📉 Following U.S. President Donald Trump’s statement in a phone interview with CBS News that he was thinking about taking control of the Strait of Hormuz, oil prices fell during extended trading on Monday. “The war is very complete, pretty much,” he continued. “We’ve already won in many ways, but we haven’t won enough.” He said.
🎤 During one of his speeches yesterday, he also said that: “If we didn’t do that B2 attack, Israel would have been wiped out”
⚔️ While promising to continue “until the enemy is totally and decisively defeated,” Donald Trump projected that the battle with Iran would end “very soon.” However, the secretary of defense recently said that they had barely started.
🛢️ On the other hand, according to multiple international media, the US considers seizing Iran’s oil lifeline: US officials are reportedly discussing a plan to seize Kharg Island, which handles approximately 90% of Iran’s oil exports.
🚢 The Strait of Hormuz, a critical oil chokepoint, has been effectively closed, with Iran warning that oil tankers passing through must “be very careful.” Iran has claimed that targeting U.S. military assets in the region is “legitimate under international law.”
🛂 Iran also says that any Arab or European country that expels the Israeli and US ambassadors will be granted free passage through the Strait of Hormuz starting tomorrow.
🛰️ The regime is betting that it can outlast the United States and Israel through a strategy of endurance, unleashing drones, missiles, and disrupting vital energy routes to jolt global markets and force Washington to blink first.
🔥 Iran is escalating strikes across the Gulf, targeting energy hubs to maximize economic disruption and test Washington’s political will, in a calculated attempt to drive up costs for its neighbors, Europe, and the U.S.
🧨 The U.S. claims a large share of Iran’s arsenal has already been destroyed, though regional sources say Iran may still retain more than half its pre-war stockpile.
💰 Iran hopes that by driving up energy prices and spreading financial pain across Western economies, the pressure will force a U.S. retreat, even if much of its strategic infrastructure is destroyed, as survival alone would be enough for Iran to claim triumph.
🔎 The truth is that, given recent events, everything points to the war not being over, at least not on the part of Iran.
📰 The Washington Post reported that two suspected Iranian drones hit the CIA station located within the U.S. Embassy compound in Riyadh, Saudi Arabia. An internal State Department alert cited by the Post said the strike caused part of the embassy roof to collapse, filled parts of the building with smoke, and left the structure significantly damaged, though there were no CIA casualties reported.
🏢 The State Department has ordered drawdowns or departures of non-essential staff and dependents at a growing list of posts in and around the Middle East, including Saudi Arabia, Oman, Cyprus, Pakistan, and some consulates in Turkey, as the war with Iran escalates.
⛽ The oil price shock has prompted South Korea to impose a price cap on fuel products for the first time in 30 years, as gasoline prices surge. The government is also looking to diversify its energy import sources.
🇩🇪 German Chancellor Friedrich Merz stated that it depends “solely” on the Iranian mullahs for the hostilities in the Middle East to cease and for the war to end.
🇬🇧 According to the Financial Times, British officials say contingency plans to deploy the aircraft carrier HMS Prince of Wales to the Middle East have been scrapped, and the carrier will not be sent to the Iran war theatre. UK defense sources indicate the ship is instead being oriented toward NATO and high-north/Arctic tasks rather than an Iran-related mission.
🏭 An oil refinery in Tehran was hit yesterday, escalating strikes on Iran’s domestic energy supplies, and Turkey reported shooting down an Iranian ballistic missile that entered its airspace.
🇮🇱 Israel launched new attacks in central Iran and struck Beirut, where it has extended its campaign after Hezbollah fired across the border.
🇦🇺 Australia has promised to send military surveillance aircraft to the Middle East and missiles to the UAE to help defend against attacks from Iran.
🇷🇺 Trump ordered a partial lift of sanctions on Russian crude to lower the burden on international markets, which allowed other countries to buy Russian oil.
🇮🇳 This policy shift comes after months of the U.S. previously pressuring India to abandon energy purchases from Russia by imposing tariffs on Indian goods.
🗣️ However, India has issued a strong statement asserting that it does not need permission from any country to buy Russian oil, and that it has continued importing Russian oil even in February 2026.
🌏 If China and Russia are able to fully supply India’s oil needs, and Saudi Arabia can reroute oil from the Strait of Hormuz, the blockade of the Strait may become less ominous for global oil supply.
🏦 Russian President Vladimir Putin has told major Russian oil and gas companies to treat the current price spike due to the Iran war as a temporary windfall, and to use it to pay down their debts rather than increase spending or dividends.
🔌 In parallel, Putin has threatened to further cut gas supplies to Europe and floated diverting LNG away from the EU, using the crisis to regain leverage over European buyers.
💵 The Iran-driven price rally is helping Russia’s budget and war financing. By pushing companies to cut debt now, the Kremlin is trying to improve Russia’s economic resilience before prices normalize again, and to turn a short-term geopolitical shock into longer-term financial breathing room for a sanctions-hit, war-time economy.
🇯🇵 Japan’s Q4 2025 GDP was revised up to 1.3% annualised (0.3% quarter-on-quarter), led by a strong 1.3% rise in business capital expenditure and a 0.3% increase in private consumption, indicating continued domestic-demand-led growth.
📉 However, household spending fell 1.0% year-on-year in January and the Iran conflict — risking energy supply disruptions and higher fuel costs — clouds the outlook and could dampen consumption and investment. Japan’s nominal GDP is now ¥663.8 trillion ($4.2 trillion).
🇬🇧 UK consumer spending rose 1.1% year-on-year in February (after 0.8% in January), but growth slowed as consumer confidence fell amid concerns the Middle East conflict could push up fuel prices, energy bills and inflation.
🛍️ Barclays found about four in five consumers worried about higher costs and over half feared travel disruption; many are cutting energy use, saving more, or delaying big purchases.
⏳ Back to the 1970s and the energy-inflation shock?
📈 Investors are seriously considering the possibility that the war in the Middle East could create a stagflationary shock, similar to what happened in the 1970s when disruptions to global energy supplies sent inflation surging and battered economic growth.
📊 High oil prices also dampen economic growth, with the IMF estimating that every persistent 10% rise in oil prices leads to a 0.1-0.2% fall in global economic output.
🏦 This puts central banks in a bind, as raising interest rates to restrain inflation could further undermine economic growth. Markets now expect rate hikes from the ECB and Bank of England this year.
🇺🇸 As we mentioned at the beginning of this conflict, the U.S. is likely to be less exposed to the stagflationary impact compared to Europe and Asia, as it is more self-sufficient in commodities.
📉 However, inflation fears are reflected in the widening spread between US inflation-linked bonds and standard US bonds. Demand for inflation protection in bonds is increasing.
📊 Market view.
📈 Markets are rebounding with renewed optimism following President Trump’s remarks last night, in which he stated that trade through the Strait of Hormuz would be restored.
📊 E‑mini S&P 500 futures have reclaimed the 6,800‑point level, currently trading around 6,815.
📈 Nasdaq 100 futures have also regained the 25,000 mark, now trading near 25,060.
🛢️ Oil prices have retreated sharply. Spot Brent crude is now trading at approximately $89.95 per barrel, down nearly 30% from the highs reached early Monday morning, and below Friday’s closing levels.
💲 The US dollar is also easing. The DXY index has broken below the support levels formed last week, falling to around 98.55, allowing EUR/USD to reclaim the 1.1600 level and rise towards 1.1655.
🇪🇺 In Europe, DAX 40 futures are trading above 23,800 points, a level briefly achieved during yesterday’s session.
🇪🇺 Euro Stoxx 50 futures are attempting to consolidate above 5,800 points, having also recovered during the previous session.
🥇 Gold futures are climbing towards $5,188 per ounce, approaching the March resistance zone near $5,200.
₿ Meanwhile, Bitcoin is strengthening once again, advancing towards $70,535.
