Geopolitical tensions are setting the tone at the start of the trading week, with the U.S. decision to impose a blockade in the Strait of Hormuz fuelling volatility. The move has lifted oil prices once again, while upcoming inflation data and a packed earnings calendar could shape sentiment in the days ahead.
1. U.S. begins Hormuz blockade
The U.S. military has confirmed it will implement restrictions on vessels linked to Iran in the Strait of Hormuz from 10 a.m. Eastern on Monday, following an order from President Donald Trump after weekend talks with Tehran broke down.
The Pentagon said ships “entering or departing Iranian ports and coastal areas” will be affected, while vessels not tied to Iran will still be able to transit the waterway.
The move follows 21 hours of negotiations in Pakistan that failed to secure an extension to the fragile two-week ceasefire. Vice President JD Vance, who led the U.S. side, said Iran rejected demands to curb its nuclear program. Pakistan, which mediated the talks, urged both parties to “uphold their commitment to ceasefire.”
Meanwhile, separate talks between Israel and Lebanon are due in Washington this week, though ongoing strikes on Hezbollah-linked targets continue to cast doubt over the durability of a broader regional truce.
2. Oil prices surge past $100 again
Crude markets rallied on Monday, with prices climbing back above the $100 per barrel mark.
Brent crude rose 6.7% to $101.65, while U.S. West Texas Intermediate gained 7.1% to $103.42.
Despite the sharp move, Pepperstone analysts described the reaction as “relatively contained,” suggesting investors largely see the blockade as a negotiating tactic rather than an immediate supply shock.
“I’d not be at all surprised to see risk assets remain underpinned to a degree, with continued hope that a deal can be agreed likely to continue to encourage dip buying, even as crude benchmarks are likely to grind steadily higher as physical supply tightens further,” said Michael Brown, Senior Research Strategist at Pepperstone.
Oil had briefly fallen below $100 last week after the ceasefire announcement, which came after Trump warned Iran’s “civilization” could be destroyed if the Strait of Hormuz remained closed. Even so, prices continue to trade well above pre-conflict levels.
3. Focus turns to U.S. producer prices
The rebound in energy costs has heightened concerns about inflation and its implications for global monetary policy.
Investors will be watching closely for U.S. producer price index (PPI) data this week, which will reflect price trends in March—the first full month impacted by the Iran conflict.
Recent consumer price figures already showed a notable rise, driven largely by higher fuel costs. Energy prices increased 12.5% year-on-year, up sharply from 0.5% in February.
However, core inflation—excluding food and energy—came in below expectations at 2.6% annually and 0.2% month-on-month.
Given this softer core reading, analysts suggest the Federal Reserve may take a measured approach when interpreting inflation data. The upcoming PPI release could provide further clarity on the outlook for interest rates.
“A stronger-than-expected [PPI] reading would reinforce the case for a ‘higher for longer’ rate outlook, likely supporting the dollar and leaving EUR/USD’s recent rebound vulnerable to renewed downside,” said Laurence Booth, Global Head of Markets at CMC Markets.
4. Bank earnings kick off reporting season
The U.S. earnings season gathers momentum this week, starting with results from major financial institutions.
Goldman Sachs (NYSE:GS) is among the first to report, with its stock up about 3% year-to-date. Trading revenues have benefited from portfolio adjustments linked to developments in artificial intelligence, while its investment banking arm has also shown growth.
However, the conflict in Iran could weigh on outlooks. While market volatility can boost trading activity, higher commodity prices may deter companies from pursuing large transactions such as mergers and acquisitions, potentially impacting advisory revenues.
Other banks set to report include JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C), Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS).
Outside the banking sector, results are also expected from Netflix and PepsiCo.
5. European luxury earnings in spotlight
In Europe, attention will also turn to the luxury sector, where several major players are due to report.
LVMH (EU:MC) will release first-quarter sales, with geopolitical developments likely to influence its outlook. Rivals Kering SA (EU:KER) and Hermès (EU:RMS) are also scheduled to report.
Reuters has reported that luxury sales in hubs such as Dubai and Abu Dhabi have weakened due to the conflict, weighing on the roughly $400 billion sector.
Meanwhile, ASML (EU:ASML is set to report on Wednesday, with investors focused on its ability to meet strong demand from artificial intelligence chipmakers.
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