Market Report.
⚠️ The conflict is escalating in a way that could have severe humanitarian consequences for the civilian populations in the region, if the threats from both sides are carried out.
🇺🇸 U.S. President Donald Trump on Saturday delivered a stark ultimatum to Iran, threatening to “obliterate” Iran’s power plants if Tehran does not fully reopen the Strait of Hormuz within 48 hours. This represents an escalation in the ongoing U.S.-Israel conflict with Iran.
🚨 Iran has warned that if the U.S. attacks Iran’s power plants as threatened by President Trump, Iran will retaliate by targeting U.S. and allied energy, IT, and desalination infrastructure across the Middle East.
📋 Iran has published a detailed list of civilian infrastructure across the Gulf region that it says it would strike in retaliation if the U.S. attacks Iran’s power grid. The list identifies specific facilities, mainly desalination and power plants, across 6 countries – Saudi Arabia, Qatar, UAE, Bahrain, Kuwait, and Jordan.
💧 The targets include some of the region’s largest water and electricity providers, such as the world’s largest desalination facility in Saudi Arabia and critical power plants that supply up to 90% of the water and electricity in these countries.
⚡ Attacking Iran’s power sector alone would not have immediate repercussions for global energy supplies, as Iran has 98 operational natural gas power plants. However, Trump’s threat could be a reference to targeting the Bushehr nuclear plant. This could also cause unpredictable regional radioactive contamination, where, under certain conditions, the radioactive cloud could move towards the Gulf countries, which are US allies.
🚀 The U.K. said Iran unsuccessfully targeted a joint U.S.-U.K. military base on the Indian Ocean island of Diego Garcia, marking Iran’s first operational use of intermediate-range ballistic missiles. This sets a key precedent, as the range of the missile puts more countries at risk; if Europe were to join the conflict, it could be attacked.
🛢️ The U.S. has temporarily waived sanctions to allow the sale of Iranian oil at sea for 30 days, in an effort to ease rising oil prices.
🌍 The Executive Director of the International Energy Agency (IEA), Fatih Birol, warned that the current energy crisis is “very serious” and exceeds the energy crises of the 1970s. Birol noted that the current crisis is equivalent to “two oil crises and a gas collapse combined,” posing a “greater threat” to the global economy: “the two major oil crises in the 1970s and the 2022 natural gas crisis after Russia invaded Ukraine all put together.”
🏭 Birol also said that more than 40 energy assets across 9 countries in the Middle East have been “severely or very severely” damaged by the ongoing conflict. While countries are looking to their own domestic interests, Birol said the whole world needs to face this energy crisis together, and unjustified export restrictions may not be well-received.
📦 The IEA has already announced a record 400 million barrel release from emergency oil reserves, and further releases can be made if necessary. However, the true solution is the reopening of the Strait of Hormuz, a major trade route that has been nearly blocked.
🕊️ Iran said it is ready to facilitate the passage of Japanese vessels through the Strait of Hormuz, and that it is seeking a “complete, comprehensive and lasting end to the war” rather than just a ceasefire.
🇸🇦 Saudi Arabia maintains approximately 40% of its pre-war exports via an old oil pipeline.
🛤️ The 1,200-kilometer East-West pipeline in Saudi Arabia has become a crucial workaround for the closure of the Strait of Hormuz, a vital global oil chokepoint.
🚢 The pipeline, built in the 1980s as a contingency plan, allows Saudi Arabia to export crude from the Red Sea port of Yanbu instead of the Persian Gulf, bypassing the Strait of Hormuz.
📈 With the Strait of Hormuz effectively closed, Saudi Arabia has ramped up exports from Yanbu, which have surged to over 4 million barrels per day at times, around half of the country’s pre-war total.
💥 However, the East-West pipeline is not immune to attacks, as demonstrated by the recent strike on the Samref refinery in Yanbu, highlighting the continued vulnerability of energy infrastructure in the region.
📰 According to Financial Times, Europe needs to prepare now for an extended energy shock.
⚙️ Europe needs to prepare for extended energy supply disruptions, learning from the mistakes made during the 2022 gas crisis response. The European response in 2022 focused on replacing lost Russian gas supplies, restocking storage, and protecting consumers through subsidies – but failed to adequately manage demand.
📉 A better approach would be to prioritize demand reduction measures across different sectors, with a strong public communication campaign to encourage energy conservation. But those of us who live in Europe and the UK remember how the political class told us then that we had to be more supportive, take fewer showers, use less heating or air conditioning. Some critics argued that this was contradictory, suggesting that while the measures were presented as sanctions aimed at punishing Russia’s oil sector, in practice it was European citizens who ultimately bore the cost.
📊 FT believes that, the energy crisis triggered by the conflict in the Middle East is being underestimated – disruptions to oil and gas flows through the Strait of Hormuz will likely last much longer than initially expected, potentially for months or even years.
🏗️ The shutdown of the world’s largest LNG plant in Qatar, which could take 3-5 years to fully repair, is an example of how the conflict is escalating from temporary trade flow disruptions to damage of vital energy infrastructure.
🏦 ECB could raise interest rates as soon as April!
📈 Major global brokerages now see a higher likelihood of the European Central Bank (ECB) and Bank of England (BoE) delivering interest rate hikes, potentially as early as April, due to renewed inflation risks from the Middle East conflict.
🏛️ Barclays and J.P. Morgan expect the ECB to hike rates in April, with further increases in June and July respectively. Morgan Stanley and Deutsche Bank forecast 25 bps hikes in June and September.
💼 In a “very adverse” scenario, Goldman Sachs expects the ECB to deliver a cumulative 75 bps of rate hikes starting in June, with an early April hike also possible.
🇬🇧 For the BoE, J.P. Morgan expects 25 bps hikes in April and July, while other banks see a significant risk of a near-term rate hike, potentially as early as April.
🤔 However, some banks like Citigroup and Morgan Stanley do not yet see enough evidence for the BoE to tighten policy soon, and expect the central bank to remain on hold for an extended period.
🌍 Europe: A political earthquake every day is closer on the continent.
🗳️ The National Rally (RN) has reportedly won control of more than 40 French cities in the latest local elections, including Nice, delivering a major blow to the left‑wing alliance.
📌 If confirmed at that scale, the result would mark a significant expansion of the party’s municipal footprint and signal a notable shift in the local political landscape.
🗣️ Jordan Bardella (RN president) claimed the party won “nearly 70 communes” and secured around 3,000 municipal councillors. Official and media tallies, however, indicate that the RN and its allies (including supporters of Éric Ciotti) won 55 communes with more than 3,500 inhabitants, 38 of them in the second round.
📊 Reports suggest the RN now controls roughly 37 larger towns (“villes”), compared with about 9 previously — a substantial expansion of its municipal base. If these figures stand, this represents an unprecedented surge in RN’s local-level power, significantly strengthening its grassroots infrastructure ahead of future national contests.
📣 Meanwhile, the U.S. polling firm Harris Interactive has released the results of a survey conducted in France that identifies Le Pen’s party as the leading political force for the 2027 elections, with an overwhelming 36% of the vote, more than double that of the second-place party.
Market View.
📉 European futures are falling sharply, with the DAX dropping below 22,150, marking a decline of roughly 13% since the start of the conflict with Iran.
📉 Euro Stoxx 50 futures have also fallen, breaking below 5,350.
🇺🇸 Meanwhile, US futures are clinging to the last key support levels formed since September 2025.
📊 S&P 500 futures are attempting to hold above 6,500, while Nasdaq 100 futures are trying to reclaim 24,000, currently trading around 23,875.
💵 The US dollar index (DXY) is strengthening once again, approaching the 100 mark, currently at 99.75, continuing its upward move since Thursday. This renewed dollar strength is pushing EUR/USD back below 1.1550, while USD/JPY is edging closer to 160, now trading around 159.50.
🥇 Gold futures continue to decline sharply, breaking below $4,300 per ounce, a level that had been considered significant support since late 2025.
🛢️ Spot Brent crude maintains its upward trajectory, currently trading at $113.75 per barrel.
₿ Finally, Bitcoin is failing to consolidate last week’s gains and has fallen below $68,500.
