Global Economy & Markets, Weekly Roundup 03/03/26
Geopolitical uncertainty increased abruptly, with the conflict in the Middle East roiling global commodity markets
The US and Israel launched military strikes on Iran on Saturday February 28th. Iran has responded with strikes on various targets across the Middle-East. The conflict has widened, with Iran-affiliated entities also entering the scene.
Oil prices have increased by +10% since Thursday, with the Brent crude at $78/barrel, appearing poised for a further rise on March 3rd. Natural gas prices also edged higher, with 1-year ahead European TTF futures contracts up by +9% to €30/MWh). “Spot” TTF posted a sharper +33% on Monday and was poised for a further acute rise on Tuesday, of c. +25% to €55/MWh.
Iran represents c. 3% of global production of crude oil and c. 6% of natural gas, with the channels through which respective supply disruptions occur, being wider. In the event, oil & gas infrastructure in other Middle East countries is being targeted by Iran, with several facilities suspending operations (e.g. Qatar’s LNG production, equivalent to close to 20% of global supply, has been halted).
More importantly, maritime flows through the Straight of Hormuz (SoH) are being disrupted. Recall that the SoH is located between Oman and Iran and is the primary export route for oil produced by Saudi Arabia, Kuwait, Qatar, Iran, Iran and the UAE. Circa 30% of world’s seaborne oil trade and 20% of global LNG exports (Qatar, UAE) moves through the SoH.
Furthermore, shipping companies are avoiding passing through the Red Sea, with many flows directed towards Europe going around Africa. Overall, the aforementioned developments in shipping incurs higher costs (freight rates, insurance).
Eight major OPEC+ members agreed in principle to increase the daily production cumulatively by +206k barrels as of April, to 33.5 million barrels per day, a modest hike, albeit similar decisions may follow if supply disruptions persist. The ultimate level of the effect on oil & gas prices will primarily (and not linearly), depend on the extent as well as the duration of the disruptions of flows.
Global equity markets lost up to c. -2% on Monday March 2nd. Regarding geographical allocations, European equities underperformed, with US equity markets remaining broadly flat, albeit equity volatility is expected to remain elevated in the short term. Gold prices gained +1% to $5327/ounce.
Core government bond yields rose on concerns for higher inflation, due to a spike in major energy commodities. The US 10-Year Treasury yields were up by +9 bps on Monday to 4.05% (albeit down by -19 bps since end-January). In a similar vein, German 10-Year Treasury yields rose by +6 bps to 2.71% (-14 bps since end-January) with euro area periphery bond spreads widening marginally.
At the same time, with custom duties broadly offsetting the deficit creation of the mid-2025 fiscal bill (“OBBBA”) in the US, the decision by the Supreme Court of the United States (SCOTUS) to strike down the “Reciprocal Tariffs and the Trafficking and Immigration Tariffs” which President Trump had imposed in 2025 invoking the International Emergency Economic Powers Act (IEEPA), sets US trade policy under reconfiguration, in a highly challenging federal fiscal trajectory.
According to our estimates, the collected IEEPA-related customs duties, amount to $170 bn - $175 bn (0.5% of 2025 US GDP), representing somewhat more than ⅔ of the tariffs imposed in 2025.
The US and Israel launched military strikes on Iran on Saturday February 28th. Iran has responded with strikes on various targets across the Middle-East. The conflict has widened, with Iran-affiliated entities also entering the scene.
Oil prices have increased by +10% since Thursday, with the Brent crude at $78/barrel, appearing poised for a further rise on March 3rd. Natural gas prices also edged higher, with 1-year ahead European TTF futures contracts up by +9% to €30/MWh). “Spot” TTF posted a sharper +33% on Monday and was poised for a further acute rise on Tuesday, of c. +25% to €55/MWh.
Iran represents c. 3% of global production of crude oil and c. 6% of natural gas, with the channels through which respective supply disruptions occur, being wider. In the event, oil & gas infrastructure in other Middle East countries is being targeted by Iran, with several facilities suspending operations (e.g. Qatar’s LNG production, equivalent to close to 20% of global supply, has been halted).
More importantly, maritime flows through the Straight of Hormuz (SoH) are being disrupted. Recall that the SoH is located between Oman and Iran and is the primary export route for oil produced by Saudi Arabia, Kuwait, Qatar, Iran, Iran and the UAE. Circa 30% of world’s seaborne oil trade and 20% of global LNG exports (Qatar, UAE) moves through the SoH.
Furthermore, shipping companies are avoiding passing through the Red Sea, with many flows directed towards Europe going around Africa. Overall, the aforementioned developments in shipping incurs higher costs (freight rates, insurance).
Eight major OPEC+ members agreed in principle to increase the daily production cumulatively by +206k barrels as of April, to 33.5 million barrels per day, a modest hike, albeit similar decisions may follow if supply disruptions persist. The ultimate level of the effect on oil & gas prices will primarily (and not linearly), depend on the extent as well as the duration of the disruptions of flows.
Global equity markets lost up to c. -2% on Monday March 2nd. Regarding geographical allocations, European equities underperformed, with US equity markets remaining broadly flat, albeit equity volatility is expected to remain elevated in the short term. Gold prices gained +1% to $5327/ounce.
Core government bond yields rose on concerns for higher inflation, due to a spike in major energy commodities. The US 10-Year Treasury yields were up by +9 bps on Monday to 4.05% (albeit down by -19 bps since end-January). In a similar vein, German 10-Year Treasury yields rose by +6 bps to 2.71% (-14 bps since end-January) with euro area periphery bond spreads widening marginally.
At the same time, with custom duties broadly offsetting the deficit creation of the mid-2025 fiscal bill (“OBBBA”) in the US, the decision by the Supreme Court of the United States (SCOTUS) to strike down the “Reciprocal Tariffs and the Trafficking and Immigration Tariffs” which President Trump had imposed in 2025 invoking the International Emergency Economic Powers Act (IEEPA), sets US trade policy under reconfiguration, in a highly challenging federal fiscal trajectory.
According to our estimates, the collected IEEPA-related customs duties, amount to $170 bn - $175 bn (0.5% of 2025 US GDP), representing somewhat more than ⅔ of the tariffs imposed in 2025.