Headline: Morning Update: Middle East Turmoil

• At least 150 tankers have dropped anchor in Gulf waters with three reportedly hit, disrupting critical energy shipping routes through the Strait of Hormuz
• Brent crude reached its highest level since January 2025 and turned positive year-over-year for the first time in over a year, with some analysts forecasting $100 per barrel if the conflict extends several weeks
• Markets have pushed back expectations for the next Fed rate cut to September as rising energy prices threaten inflation, while the dollar strengthened against major energy importers including Japan, China, and Europe

Market Summary: Middle East Conflict Drives Oil Spike and Market Volatility

Key Developments:

Joint U.S.-Israeli strikes on Iran on Saturday have escalated into broader regional conflict, with Iranian Supreme Leader Ali Khamenei reportedly killed. Iran's retaliation has brought traffic through the critical Strait of Hormuz to a standstill, with at least 150 tankers anchored in Gulf waters and three attacked.

Energy Markets:

Brent crude spiked to over $80 per barrel Monday morning—highest since January 2025—before settling around $79. Oil prices are now positive year-over-year for the first time in over a year. Market analysts predict potential moves toward $100/barrel if the conflict extends several weeks. A modest OPEC+ output increase planned for April will likely prove insufficient given export disruptions from Gulf producers.

Market Impact:

• Equities: Global stocks declined 1-2%, with U.S., Asian, and European benchmarks all posting losses
• Currency: U.S. dollar strengthened significantly on concerns affecting major energy importers (Japan, China, Europe)
• Fixed Income: Treasury markets showed conflicting signals—2-year yields rebounded from three-year lows, reversing Friday's decline, as inflation concerns offset safe-haven demand

Federal Reserve Implications:

Rising energy prices, combined with Friday's employment data, have clouded the Fed's outlook. Markets no longer fully price in another rate cut until September.

Company Mention:

Saudi Aramco's Ras Tanura oil refinery was struck by Iranian drones.

Critical Factor:

The conflict's duration will determine sustained market impact, with supply disruption risks mounting as the Strait of Hormuz remains compromised.