Iran wants to maintain the blockade of the Strait of Hormuz until the United States closes all its bases in the Middle East

On Thursday, the American market was gripped by panic amid a sharp spike in Brent crude above $100 per barrel. By the end of the trading session, the Dow Jones Index (US30) declined by 1.56%. The S&P500 Index (US500) fell by 1.52%. The Nasdaq Technology Index (US100) dropped by 1.78%. The trigger was the harsh statements made by Iran’s new leader, Mojtaba Khamenei, regarding an indefinite blockade of the Strait of Hormuz, which completely negated the effect of record commodity interventions by the IEA and forced investors to prepare for a prolonged energy crisis. An additional blow to sentiment was dealt by the financial sector following a 4.1% collapse in Morgan Stanley shares due to a freeze on payments in private credit funds, which intensified fears of a systemic liquidity crisis.

The Canadian dollar (CAD) weakened to the level of 1.365 per US dollar, as the global flight of investors into safe-haven assets outweighed the benefit from the jump in WTI oil prices above $100 per barrel. Domestic pressure on the currency intensified after data showed an increase in Canadian unemployment to 6.8% in February, indicating the labor market’s inability to absorb the influx of new labor. Nevertheless, the Bank of Canada (BoC) is likely to maintain the rate at 2.25% at the meeting on March 18.

The Mexican peso (MXN) weakened to 17.83 per dollar, finding itself under double pressure: the flight of investors into safe-haven assets due to Iran’s threats to block the Strait of Hormuz and an unexpected jump in domestic inflation. In February, Mexico’s annual consumer price figure reached 4.02%, which, for the first time in a long period, took inflation outside the central bank’s target range (3% ±1%) and practically nullified the chances for an interest rate cut at the upcoming March meeting. Despite the fact that rising oil prices traditionally support Mexico’s budget revenues, the peso remains extremely vulnerable to geopolitical risk and potential trade tariffs, forcing the Bank of Mexico to maintain a “hawkish” pause and keep the rate at 7.00% to stabilize the currency.

European stock markets continued their decline amid the harsh statements of Iran’s new leader, Mojtaba Khamenei, who in his first official message called for the closure of US military bases in the region and confirmed the indefinite blockade of the Strait of Hormuz. The German DAX (DE40) decreased by 0.21%, the French CAC 40 (FR 40) closed down by 0.71%, the Spanish IBEX 35 index (ES35) fell by 1.22%, and the British FTSE 100 (UK100) closed at a negative 0.47%. Geopolitical tension triggered a sell-off in the banking sector: Deutsche Bank collapsed by 5.4% due to concerns about risks in the 26 billion euro private credit segment and possible legal costs, while Commerzbank shares lost 3.9%. UniCredit and BNP Paribas fell by nearly 4%.

WTI oil futures came close to the $97 per barrel mark, while the North Sea Brent blend settled above $101. The market switched to “war panic” mode after the first official address by Iran’s new supreme leader, Mojtaba Khamenei: he confirmed that the blockade of the Strait of Hormuz is Tehran’s strategic priority and will be maintained until the full withdrawal of American bases from the region. The situation was exacerbated by nighttime attacks by Iranian speedboats (IRGC) on the Marshall Islands-flagged tanker “Safe Sia,” which completely paralyzed maritime logistics in the Persian Gulf. The IEA officially recognized the current crisis as the largest supply disruption in history, estimating the drop in global supply in March at 8-10 million barrels per day. Due to the physical impossibility of exporting oil and the overflowing of storage facilities, Persian Gulf countries began a large-scale shutdown of wells, effectively removing 20% of global trade from the market.

Henry Hub natural gas prices (XNG) broke the $3.2 per million BTU mark, reaching a monthly high amid critical disruptions in global supplies. The shutdown of QatarEnergy plants, which provide 20% of the world’s LNG market, and the blockade of the Strait of Hormuz forced Asian and European consumers to urgently switch to American fuel, leading to a sharp increase in export demand. Despite the global rally, the US domestic market demonstrates restraint: according to the EIA, during the first week of March, inventories decreased by only 28 billion cubic feet, which was less than expectations due to warm weather and record production levels (about 110 billion cubic feet per day). Nevertheless, the close link of the American hub to world prices under the conditions of the Middle East war keeps quotes at a high level, creating the prerequisites for further growth.

Asian markets also followed the general downward trend. The Japanese Nikkei 225 (JP225) fell by 1.04% during the trading session, the Chinese FTSE China A50 (CHA50) decreased by 0.35%, the Hong Kong Hang Seng (HK50) fell by 0.70%, and the Australian ASX 200 (AU200) showed a negative result of 1.31%.

On Friday, the offshore yuan (CNY) rate fell to 6.88 per dollar, reacting to a new wave of trade pressure from the US. The Trump administration initiated Section 301(b) investigations against China and a number of other countries, accusing them of using forced labor and creating excess production capacity. These measures are seen by the market as an attempt by Washington to restore tariff pressure leverage after the US Supreme Court previously limited the president’s powers to introduce duties through the IEEPA law. The situation is heating up amid preparations for the critically important summit between Xi Jinping and Donald Trump in Beijing, scheduled for the end of March. Despite strong export data from China (growth of 21.8% for January-February), the currency remains extremely sensitive to threats of new 15% tariffs, which could be introduced based on the results of current investigations as early as summer.