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Muddled messages lead to another mixed week for oil prices and markets

Oil prices fell on Monday after President Trump postponed his threatened attack on Iranian power plants. Similar to what we saw during “Liberation Day” tariff U-turns last year, there was a flurry of unusual activity on oil and S&P futures before Trump announced the postponement. The number of bets on crude and brent oil contracts effectively increased threefold exactly ten minutes before the announcement sparking fresh speculation about insider trading.

As the week progressed, Iran dismissed the US’s 15-point peace plan and proposed legislation to collect tolls from ships that want to travel through the Strait of Hormuz. According to International Maritime Organisation Secretary-General, Arsenio Dominguez, there are nearly 2,000 ships currently waiting to sail through the strait.

3,500 US marines and sailors arrived in the Middle East aboard the USS Tripoli this weekend, joining the roughly 50,000 troops already stationed in the region. The USS Tripoli is an amphibious assault ship, and unlike standard aircraft carriers, its primary role is to put troops and combat vehicles onto land. Last night in an interview with the FT, Trump said, “my favourite thing is to take the oil in Iran” and suggested that US forces could be used to seize the export hub on Kharg Island. Following Trump’s comments, brent crude oil has surged to $115 a barrel.

With $120 oil prices now a real possibility, South Korean politicians have said they may extend their five-day rotating public sector car ban to also include private cars. Earlier in the week, Japan released 80mn barrels of oil from their reserves, the equivalent to 45 days of domestic demand, and 1.8 times more than the amount released after the Fukushima nuclear power plant disaster in 2011.

Pre-war UK inflation stays at 3%

The latest Consumer Price Index (CPI) numbers from the Office for National Statistics (ONS) showed UK inflation stayed at 3% during February. Last week’s release marks the final data from before the war in Iran and many economists now expect the next reading to rise following the shock to energy prices caused by the conflict.

From careless to callous – landmark lawsuits send Meta and Alphabet shares tumbling

Shares in Meta and Alphabet fell 13% and 9% respectively following their defeats in a landmark social media addiction trial.

The case was tried in Los Angeles. A woman known as “Kaley”, sued both firms over her childhood addiction to social media. The jurors decided that she should receive $3mn in compensation and charged Meta and Google (through their ownership of YouTube) an additional $3mn in punitive charges because they “acted with malice, oppression or fraud” when operating their platforms. A day earlier, Meta was also found liable by a jury in New Mexico for the way its platform endangers children and exposes them to sexually explicit material and sexual predators. Both these decisions could have serious implications for hundreds of similar cases that are going through US courts at the moment.

In another blow to social media firms, here in the UK, Sir Kier Starmer backed banning addictive social media features. He said the government was “going to have to act” to stop algorithms from hooking in young people and children.

On top of the Meta and Alphabet selloffs, the NASDAQ suffered its fifth consecutive downwards week as the war in Iran continues to weigh heavily on US tech stocks.

On the AI side of tech news, Wednesday saw OpenAI shut down the AI video-generation app Sora and end its $1bn content partnership with Disney. Since its launch two years ago, Sora had an estimated daily inference cost of $15mn and made just $2.1mn in total lifetime revenue. The deal between OpenAI and Disney was only signed in December.  

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Interest rates held in US, UK, Europe and Japan

The Federal Reserve, Bank of England (BoE), European Central Bank (ECB) and the Bank of Japan (BoJ) all voted to keep interest rates unchanged last week. 

Fed board members now expect US inflation to reach 2.7% by the end of the year, up from December’s prediction of 2.4%. Regarding the impact of the war in Iran, Fed Chairman, Jerome Powell, cautioned “We just don’t know what the effects” will be. He went on to express his concern that we haven’t yet seen the last of the price rises from Trump’s tariffs. On the unemployment outlook he said he “was not really comfortable with the balance” created by the admin’s crackdown on immigration and its reduction of the overall size of the workforce. He also pledged to not leave the bank until the criminal investigation of him by the Department of Justice (DoJ) is resolved.

Here in the UK, the BoE held rates and warned the “shock to the economy” from the war could push inflation as high as 3.5% by the summer. The Bank’s Deputy Governor, Sarah Breeden said she “would have expected to vote for a cut again in March” if the war in Iran had not started. In a stark turnaround, markets are now forecasting up to four interest rate hikes this year. However, the Bank’s Governor, Andrew Bailey, did caution those predicting rate increases against “reaching any strong conclusions.”

In Frankfurt, the ECB said they were watching closely and ready to act if rising oil prices started impacting growth and inflation. The duration of the conflict was top of their concerns, adding, “A prolonged disruption in the supply of oil and gas would result in inflation being above, and growth being below, the baseline projections.” Over in Tokyo, BoJ Governor, Kazuo Ueda, said “the governments’ stimulus measures will likely underpin the economy” and that before the conflict, “household and corporate activity had been firm.”

Mixed messaging on conflict leads to another volatile week in markets

On Monday, US allies had to react to Trump’s call for them to help protect and reopen the Strait of Hormuz. President Trump pleaded, “They should come and they should help us protect it. You could make the case that maybe we shouldn’t even be there at all, because we don’t need it. We have a lot of oil. We’re the number one producer anywhere in the world times two.” So far, his calls for help have gone unanswered.

The next day, the Director of the US Counterterrorism Center, Joe Kent, resigned over the reasons for starting the conflict and urged Trump to “reverse course”. His words seemed to fall on deaf ears with the Pentagon sending another 2,500 marines to the region and the White House calling for another $200bn to fund the war effort because according to US Defence Secretary, Pete Hegseth, “It takes money to kill bad guys”.

Gas prices shot up 23% on Thursday after Israeli air strikes hit the South Pars gas field. In retaliation, Iran stepped up their attacks on energy facilities across the Middle East. The attacks on Qatari sites infuriated Trump, leading him to threaten to “massively blow up” the world’s largest gas field. 20% of global liquefied natural gas is produced at the South Pars facility.

This weekend, Trump’s rhetoric sparked another market selloff after he threatened to strike Iranian power plants. While writing this morning, Trump has postponed any airstrikes on power plants and energy infrastructure for a five-day period depending on the “success” of “meetings and discussions”. Markets have reacted positively to the news and in the UK, the FTSE 100 has gone from being 2% down earlier to 0.95% up now.

WTO warns conflict could “crimp” AI boom and Reeves announces “Quantum Leap” package

In the world of tech, the World Trade Organisation’s (WTO), Chief Economist, Robert Staiger, warned high oil prices could “crimp” the AI boom, saying “There is an interesting possible interaction between the Middle East conflict and the AI boom, in part because the boom is very energy-intensive” and “If the price of energy continues to be elevated for the whole year, that could put a crimp on the AI boom”. According to WTO calculations, 70% of all investment growth in North America during the first three quarters of last year can be attributed to AI-related goods. 

Chancellor Rachel Reeves and the Technology Secretary, Liz Kendall, unveiled the £2bn “Quantum Leap” package of measures to help the UK become the first country to roll out quantum computers at scale by the early 2030s. By utilising the theories of quantum mechanics, quantum computers use qubits instead of bits (aka zeros and ones) to process thousands of data points at once and dramatically speed up the process for finding solutions to certain problems. The government estimates success in quantum computing could add another £200bn to the UK economy by 2045. 

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Attempts to contain oil prices lead to more marginal market losses

Various attempts to try and counter rising oil prices helped keep the price of oil below $100 a barrel in the early stages of last week. On Monday, South Korea and Thailand said they would set limits on fuel prices. All 32 members of the International Energy Agency (IEA) agreed to release a record 400 million barrels of oil from their emergency reserves. Despite this being more than double the amount released in 2022 following Russia’s invasion of Ukraine, it still only constitutes two weeks’ worth of what would normally pass through the Strait of Hormuz.

Saudi Arabia’s state oil firm, Aramco, warned of “catastrophic consequences” for oil markets if Hormuz remains blocked. This weekend, President Trump called on his allies to help “take care of that passage” and warned that Nato faces a “very bad” future if its members fail to assist. So far, none of the world’s leading economies have committed to supporting the US in the Strait. The UK is considering sending aerial minesweepers to help clear the waterway of mines.

The Centre for Research on Energy and Clean Air (CREA) estimated last week that Russian oil, gas and coal sales have so far climbed by more than 10% in March. On Friday, Trump eased some sanctions on countries buying Russian oil. Allowing Russia to sell more oil is unlikely to have much impact on oil price pressures. Russia claims to have 100 million barrels of oil at sea which is less than a single day’s global demand for oil (104 million barrels). With Hormuz still effectively shut and the Iranian military vowing to “not allow a single litre of oil to transit”, oil prices have gone back above $100 a barrel today.

The downward effect of the conflict on markets was less dramatic than the week before. Expect inflations fears to dominate the notes from this week’s Fed and Bank of England (BoE) interest rate meetings. 

GDP data from UK, US and Japan

The latest figures from the Office for National Statistics (ONS) showed the UK economy unexpectedly flatlined to 0% growth in January. Lower than many analysts’ expectations of 0.2% growth, the pound fell against the dollar and UK bond yields rose on the news. With UK unemployment at a five-year high, the ONS attributed the fall in employment activities as the largest negative contributor to January’s GDP numbers.

Across the pond, the latest release from Bureau of Economic Analysis (BEA) showed US GDP grew by 0.7% in the fourth quarter of 2025. 0.7% is well below the previous estimate of 1.4% and the Dow Jones forecast of 1.5%. According to the BEA, less services spending, particularly in healthcare, caused the largest downward drag on the GDP numbers.

Japan’s GDP growth for the fourth quarter of 2025 was revised to 1.3% marking a strong turnaround from Q3’s -2.6% contraction. Strong business spending and private consumption were behind the bounce back. So far, rising oil prices have had a limited impact on inflation due to the abolishment of the provisional gasoline tax rate at the end of last year, and government subsidies to petrol companies to help stabilise prices.

Chinese markets buoyed by OpenClaw popularity 

Chinese markets saw a bit of a boost last week as investors reacted to the surging popularity of OpenClaw in the country and the potential to monetise returns from its AI software. Many of China’s biggest cloud providers like Alibaba Cloud and Baidu, have all started incorporating OpenClaw’s AI agents and floods of startups have released their own “Claw” frameworks. OpenClaw’s software aligns well with China’s embrace of open-source AI technology and with subscriptions rising, some investors are excited that it might represent a way forward for generating actual revenue from AI software.

On Wednesday, Meta bought the AI social media network, Moltbook for an undisclosed price as they continue competing with the likes of OpenAI and Google to secure more partnerships with leading AI startups.

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Oil prices surge following IDF attacks on energy sites and fuel depots

The price of oil shot up above $100 a barrel for the first time since July 2022 when commodity markets opened at midnight. Energy sites and fuel depots in Iran were bombed by the Israeli Defence Forces (IDF) this weekend, covering Tehran in thick plumes of black smoke. In response, a spokesperson for Iran’s Revolutionary Guards (IRGC) threatened attacks against energy facilities in Gulf states and said, “If you can tolerate oil at more than $200 per barrel, continue this game.” According to reports, the US are unhappy about how wide-ranging the IDF’s strikes were, marking the first significant US-Israeli disagreement since the conflict began.

On Truth Social, President Trump tried to dismiss concerns about rising oil prices posting, “Short term oil prices, will drop rapidly when the destruction of the Iran nuclear threat is over, is very small price to pay for U.S.A., and World, Safety and Peace. ONLY FOOLS WOULD THINK DIFFERENTLY!”

Before the weekend’s strikes, markets were briefly boosted after the New York Times reported that Iranian Ministry of Intelligence operatives had reached out to the CIA with an offer to discuss terms for ending the conflict. However, the appointment of Mojtaba Khamenei as the country’s new Supreme Leader has squashed any optimism of a swift Iranian surrender. Khamenei, the second son of Ayatollah Ali Khamenei, has never held elected office but was seen as an important part of his father’s inner circle and has close ties with more conservative clerics and elements of the IRGC. Trump has previously said his appointment would be an “unacceptable” choice and many analysts see it as a symbolic move to show the regime will not bow to US-Israeli demands.

Earlier in the week, Trump gave Keir Starmer grief over the use of UK military bases. He also threatened to cut trade with Spain, who are currently leading the largest European economies for GDP growth, after they defied US requests to use Spanish bases in the region. The Spanish Prime Minister, Pedro Sanchez’s, outspoken “no to the war” stance on the conflict remains an outlier.

Korean markets were effectively forced to stop trading after a 12% slide last Wednesday. Korea’s dependence on oil imports from the Middle East means their economy is particularly exposed to the closing of the Strait of Hormuz. In an attempt to get ships moving again, the US International Development Finance Corporation (DFC) has set up a reinsurance scheme capable of covering losses totalling up to $20bn. In response to today’s surge in oil prices, Asian markets fell again, with Korea’s KOSPI down 5.96% and Japan’s Nikkei 225 down 5.2%. At the time of writing, UK markets are down between 1% and 2%. Global bond markets have been hit hard by the conflict as inflation fears push up yields on many of the largest economies’ bonds. Last week, UK gilts saw 10-year yields increase 0.39% and the US 10-year Treasury yield rose 0.17%. From our perspective, nothing has changed from last week and our stance remains the same: avoid knee-jerk decisions and focus on diversification.

So far, early estimates suggest the US is spending more than $1bn a day on the conflict. According to Iran’s Deputy Health Minister, Dr Ali Jafarian, at least 1,255 people were killed in Iran last week, including 200 children.

Global tariffs set to rise

Away from the conflict, US Trade Secretary, Scott Bessent said the US’s 10% global tariff will rise to 15% sometime this week. He also said he expects tariff rates will return by August to where they were before the Supreme Court’s recent ruling. The current replacement tariffs being imposed under Section 122 of the Trade Act of 1974 can only last for 150 days without an extension approved by the US Congress.

On Friday, data from the Bureau for Labor Statistics, showed the US lost 92,000 jobs in February. Healthcare, media and telecommunications, transportation and warehousing all saw downward swings. Normally these weak job numbers would increase the likelihood of Fed rate cuts, however this is effectively being counteracted by the inflation fears driven by the conflict in Iran.

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US and Israel launch Operations Epic Fury and Roaring Lion

On Saturday, the US and Israeli forces launched strikes across Iran targeting key security and political targets. President Trump announced the death of Iran’s Supreme Leader Ayatollah Ali Khamenei later that day. Airstrikes have continued across the country since, and, despite the loss of forty senior commanders, the Iranians have continued retaliating by bombing targets in Israel and the Gulf. Unlike last year’s Operation Midnight Hammer, Trump expects the current campaign to go on for “four weeks or less”. 

At least three ships were attacked near the Strait of Hormuz this weekend and the important waterway is effectively at a standstill. 20% of the world’s oil and gas are shipped through Hormuz. A prolonged closure could see the price of oil go over $100 a barrel and have a huge impact on not just petrol prices but also food, agriculture, industrial commodities and inflation in general. At the time of writing this morning, oil has surged, with benchmark WTI Crude up 7% to $72 a barrel. European natural gas prices have risen by as much as 25%, the biggest increase in nearly three years.

Asian and European markets have fallen sharply in response to the conflict. The Nikkei 225 lost 1.35%, and European markets in Germany, France, Italy and Spain all started trading down more than 2%. In the UK, the FTSE indexes have started the day down between 0.90% and 1.5%. Airlines and banks have taken the brunt of the price drops. Defence firms, gold and the dollar (typically considered a safe asset in times of conflict) have risen. Obviously, things are moving very fast at the moment and there’s a lot of information to digest. From our perspective, this weekend serves as yet another reminder to avoid knee-jerk decisions and focus on diversification.  

Viral doomsday essay sparks another tech sell off

The viral “2028 Global Intelligence Crisis” essay by Citrini Research spooked investors sparking another tech sell off. The essay portrays a hypothetical scenario where autonomous AI agents upend the US economy causing unemployment to surge above 10% and the S&P to fall 38%. The essay specifically names the likes of Uber, DoorDash, Mastercard and American Express as major victims of the transition — Uber and DoorDash suffer due to the ease with which developers can code up their own delivery apps, Mastercard and American Express because the AI agents decide to use cryptocurrencies for business dealings. The real-world response saw all their share prices fall between 4% and 6% on Monday.

Of course, it’s not the first modern doomsday take on AI, and the essay is actually quite tame compared to recent bestsellers like Nexus and If Anyone Builds It Everyone Dies, but it struck such a nerve with investors that it helped send the Dow Jones down 1.7%.

Nvidia’s latest quarterly earnings briefly put a pause on the decline. Revenue beat expectations by around $3bn, climbing to $68.1 for the quarter. That’s a 20% increase on Q3 and 73% up from a year ago. However, the chip makers results weren’t enough to reverse Monday’s worries with US indexes falling overall by the end of trading on Friday.

According to a report released last week by Goldman Sachs, more investors are now seeking AI-resistant “heavy assets, low obsolescence” or what they’ve deemed, “Halo” stocks. This shift towards companies that provide tangible and useful products, like energy and transport firms, has helped pushed European and UK markets to record levels this year.

OpenAI to work with Pentagon as they break another funding record

In other AI (and modern warfare) news, last week Anthropic refused to work with the US Department of Defence (DoD) over concerns about how its AI technology will be used. The makers of Claude, were concerned about the potential use of its tools for “mass domestic surveillance” and “fully autonomous weapons” with CEO Dario Amodei stating his company won’t allow his tech to “undermine, rather than defend, democratic values.” US Secretary of Defence, Pete Hegseth then threatened to invoke the Defence Protection Act to force them to comply and Trump said he would direct all federal agencies to “IMMEDIATELY CEASE” using Anthropic tools. However just hours later, OpenAI struck a deal with the Pentagon allowing them to imbed AI into classified US military networks.

OpenAI is now valued at $840bn after they announced on Friday that they’ve raised another $110bn so far in their latest funding round. That’s more than double the $40bn they generated last year in what was the biggest private tech deal on record.

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UK unemployment is at a 5-year high

UK unemployment reached its highest since the pandemic at 5.2% in the final quarter of last year, above the 5.1% economists were forecasting. The jobless rate among 18–24 year olds continued to rise, climbing to 14% as young people bear the brunt of the hiring slowdown. The market is now pricing in two UK interest rate cuts this year to 3.25%.

UK Inflation

UK Inflation did drop to 3% in January, down from 3.4% in December, driven by food, fuel and airfares. However, evidence of lingering price pressures may give strength to the three most hawkish members of the Monetary Policy Committee to keep rates on hold. Services inflation, fell to 4.4%, above economists’ expectations of 4.3% and notably higher than the BOE’s predicted 4.1%, and core inflation climbed to 3.1%, higher than the bank’s 2.9% forecast albeit the lowest level since 2021.

Trump’s Global Tariffs Struck Down by US Supreme Court

The US Supreme Court struck down President Donald Trump’s global tariffs, saying he exceeded his authority by invoking a federal emergency-powers law to impose them. The justices didn’t address the extent to which importers are entitled to refunds, leaving it to a lower court to sort out those issues, with potential refunds totalling as much as $170 billion.

On Friday Trump responded with a 10% levy on all goods coming into the US. However, on Saturday this increased to 15%, the maximum amount allowed under a never-used trade law. This law allows these new tariffs to stay in place for 5 months before the administration must seek congressional approval.

Japan, US trade deal

Japan plans to invest up to $36 billion in US oil, gas and critical mineral projects, the first tranche of its $550 billion commitment under the trade agreement it struck with President Donald Trump. The investments include a natural gas facility in Ohio, a deepwater crude export facility in the Gulf of Mexico, and a synthetic industrial diamond manufacturing facility, which are designed to build resilient supply chains and promote mutual benefits between Japan and the US.

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AI claims more victims in latest market selloff

Fresh fears over new AI innovations hit the UK and US wealth management sectors last week. On Monday, US startup, Altruist unveiled a new AI driven tax planning tool which they claim can “produce fully personalised tax strategies… in minutes.” The latest feature from their Hazel AI platform can supposedly generate personalised tax strategies for advisers that use scenario modelling to assess the impact of increased income, lifestyle changes and retirement on a client’s plans. The potential for tools like this to serve more clients more efficiently led to a market selloff in the wealth management sector that was similar to the previous week’s software exodus. In the UK, shares in St James’s Place, AJ Bell and Quilter all fell. Big names in the US like, Charles Schwab and Raymond James also declined.

Shares in price comparison site owners, Mony Group and Future also tumbled after the US firm, Insurify, launched a new service that allows users to compare car insurance quotes using Open AI’s ChatGPT.

This weekend’s big AI development was the announcement last night that OpenClaw founder, Peter Steinberger is joining OpenAI. Previously called Clawdbot and Moltbot, OpenClaw provides AI agents that can ‘autonomously’ complete tasks, like coding or workflow automations, without constant prompts and oversight from humans.

Just in: ups and downs in latest US jobs data

On Wednesday the latest US jobs data from the Bureau of Labor Statistics showed the US added 130,000 jobs in January. It was primarily driven by the healthcare and construction sectors. The uplift was nearly double what many analysts had expected. President Trump took to Truth Social to celebrate, “Just in: GREAT JOBS NUMBERS, FAR GREATER THAN EXPECTED… The Golden Age of America is upon us!!!”

However, it wasn’t all good news, as the report also contained a major revision to 2025’s overall new jobs total. According to the latest data, the total number of new jobs for 2025 was 181,000. That’s down markedly from the initially reported estimate of 584,000. The revision means last year’s job growth was actually the lowest since Covid, and far lower than the 2 million jobs that were added in 2024. The revised number is more in line with the downward trend in US job openings. The Bureau’s recent Jolts report showed openings had fallen by 386,000 in December and also reached their lowest level since Covid.

Released on Tuesday, a new report on household debt by the Federal Reserve Bank of New York showed US credit card debt rose by 5.5% in the last twelve months. This takes the total of outstanding balances up to $1.28tn. According to debt management company Achieve, 55% of US consumers are currently using credit cards to cover essential expenses and necessities.

UK and Japan GDP data

Figures from the Office for National Statistics (ONS) showed the UK economy grew by only 0.1% in the final quarter of last year. According to Liz McKeown, the Director of Economic Statistics at the ONS, “The often-dominant services sector showed no growth, with the main driver instead coming from manufacturing. Construction, meanwhile, registered its worst performance in more than four years.” The overall economic growth figure for 2025 came out at 1.3%, worse than the official forecasts of 1.5% but better than the 1.1% growth in 2024.

Sunday’s data from the Economic and Social Research Institute showed Japan narrowly avoided a technical recession after its economy grew by 0.1% in the final quarter of 2025. Private consumption offset low exports and lower spending on public services. With many analysts expecting an expansion of 0.4%, the Japanese Yen and the Nikkei 225 fell slightly in response.