U.S.-Iran Situation Takes Sudden Turn Over the Weekend: Oil Prices Surge 7% on Monday, U.S. Stock Futures Fall

Within 72 hours over the weekend, the Strait of Hormuz experienced a dramatic reversal from "full opening" to re-blockade. The U.S. military seized an Iranian cargo ship, former U.S. President Trump issued a tough threat, and Iran explicitly refused to confirm its attendance at the new round of negotiations. Affected by this, on the opening of Monday, April 20, international oil prices soared sharply, with Brent crude oil rising by a maximum of 7.9%; U.S. stock futures fell simultaneously, with S&P 500 futures dropping 0.7%. The U.S. stock market, which just hit a record high last week, is facing pressure to give back gains, and the global financial market has fallen into a state of high uncertainty again.

Last Friday, the global market was boosted by the prospect of a U.S.-Iran ceasefire. However, within just 72 hours over the weekend, the regional situation took a sudden turn for the worse—the Strait of Hormuz was re-blocked, the United States seized Iranian-related ships, and Trump made a tough statement. The optimistic sentiment accumulated in the market was quickly dispelled, returning to caution.

During the Asian morning session on Monday, April 20, international oil prices saw an explosive rise. Brent crude oil climbed to a high of $97.50 per barrel, an increase of 7.9%; WTI crude oil rose more than 7%, approaching the $90 per barrel mark. At the same time, global risk assets generally came under pressure: S&P 500 futures fell 0.7%, Dow Jones futures dropped about 0.9%, and Nasdaq 100 futures fell 0.9% in tandem. European natural gas futures also rebounded sharply, rising more than 11% at one point, erasing all losses from last Friday. The cryptocurrency market was also impacted, with Bitcoin prices falling about 0.9% to around $74,000, completely erasing last Friday's gains. The U.S. dollar index strengthened, with risk-sensitive currencies such as the Australian dollar and the South African rand leading the decline in the global foreign exchange market.

Martin Hennecke, Head of Investment Advisory for Asia and the Middle East at St. James's Place, commented on this, stating that the previous optimistic sentiment among investors was clearly premature, and the sudden change in the U.S.-Iran situation over the weekend may lead to a short-term pullback of some recent market gains.

Mark Cranfield, Strategist at Bloomberg Markets Live, analyzed that the Middle East situation is oscillating between potential peace negotiations and the blockade of the Strait of Hormuz, and this uncertainty will prompt Asian equity traders to adopt a defensive stance. However, he also mentioned that there is still pent-up demand in the technology sector, which is expected to be quickly released once the U.S. and Iran restart peace negotiations and make substantial progress.

Oil Prices: A Significant Gap Between Market Expectations and Real Situation

Last Friday, as expectations for a U.S.-Iran ceasefire heated up, international oil prices plummeted sharply. WTI crude oil fell 11.5% in a single day, and Brent crude oil dropped 9%, with both major crude oil indicators hitting their lowest levels in five weeks. But the reversal of the U.S.-Iran situation over the weekend led to a rapid rebound in oil prices, quickly recovering the losses from last Friday.

After the opening on Monday, oil prices continued their rebound trend. Brent crude oil rose to a high of $97.50 per barrel, an increase of 7.9%; WTI crude oil rose more than 7% to about $90 per barrel; European natural gas futures also rose more than 11% at one point, performing strongly.

Relevant Bloomberg analysis points out that current oil prices are the area with the most obvious gap between market pricing and the real situation. The sharp drop in oil prices last Friday has fully priced in the expectation of "situation normalization", but the actual situation is that shipping routes in the Strait of Hormuz are still blocked, tanker transportation costs remain high, and global crude oil inventories are continuously being consumed. Analysts believe that these real-world pressures will take several weeks to gradually digest.

Since the U.S.-Israel coalition launched military strikes against Iran on February 28, no LNG (liquefied natural gas) cargo has successfully been exported from the Persian Gulf region so far. This situation is cutting off about 20% of global LNG supply, further exacerbating the tension in the global energy market.

U.S. Energy Secretary Chris Wright stated on a CNN program on Sunday that U.S. gasoline prices may remain at $3 per gallon or higher, and this state may last until next year. This is in clear contradiction to U.S. Treasury Secretary Scott Bessent's previous prediction that "gasoline prices will ease before summer". According to data released by the American Automobile Association, the average price of regular gasoline nationwide in the United States last week was $4.10 per gallon, compared with less than $3 before the outbreak of the war (before February 28).

U.S. Stocks Face Pressure to Give Back Last Week's Gains

Last week, the U.S. stock market experienced a strong rebound, with the three major stock indexes performing brightly. Among them, the S&P 500 Index rose more than 3% for three consecutive weeks, hitting a new record high at the close last Friday with a weekly gain of 4.5%; the Nasdaq Index rose 6.8% last week, setting the longest 13-day winning streak since 1992; the Dow Jones Index rose 3.2% last week, achieving its best weekly performance since June.

But after the opening on Monday, U.S. stock futures first came under pressure: S&P 500 futures fell 0.7%, Dow Jones futures dropped about 0.9%, and Nasdaq 100 futures fell 0.9%; major European stock index futures also showed a general downward trend, with market risk aversion heating up.

In the cryptocurrency market, Bitcoin prices fell back to around $74,000, completely erasing last Friday's gains and weakening in tandem with risk assets.

Market analysts pointed out that last week's rebound in U.S. stocks was largely based on optimistic expectations of a U.S.-Iran ceasefire. Stephen Innes, Managing Partner at SPI Asset Management, wrote in a report released over the weekend that the current market trend is dominated by real-time geopolitics and is not built on a stable foundation. The seemingly stable situation last weekend may evolve into a negative feedback loop at the opening on Monday, presenting a situation where "prices chase headlines and headlines chase prices".

Sarah Hunt, Chief Market Strategist at Alpine Woods Capital Investors, said that only when the Strait of Hormuz truly realizes the normal passage of ships can the market's volatile situation be alleviated. Until then, the global market will remain in a state of fluctuation.

Matt Maley, Chief Market Strategist at Miller Tabak + Co., reminded of potential risks in the bond market. He said that the recovery momentum of the U.S. Treasury bond market is far less strong than that of the stock market. If Treasury bond yields rise again, it will suppress other risk assets including stocks.

72-Hour Situation Reversal: Opening, Confrontation, and Re-Blockade

The chaos in the regional situation began last Friday. According to comprehensive reports from public information, Iranian Foreign Minister Abbas Araghchi posted on the X platform announcing that the Strait of Hormuz has been officially opened.随后 Trump also publicly stated that this key energy waterway has achieved "full opening". After the news broke, an oil tanker previously stranded in the Persian Gulf immediately weighed anchor and attempted to pass through the Strait of Hormuz.

However, according to relevant media citing sources from informed shipowners, when the oil tanker sailed to about 4 miles off the Iranian coast, it was warned by the Iranian Navy to turn around and return, failing to pass through the strait successfully.

On the morning of Saturday, another batch of ships attempted to pass through the Strait of Hormuz, but was also rejected by the Iranian authorities. At noon that day, several ships made another attempt after receiving "safe passage" signals from Iranian and Indian authorities—one of the Indian-flagged oil tankers was shot at by armed men on small boats carrying guns and rocket launchers when approaching Larak Island in Iran, further escalating the situation.

After the shooting incident, the Navy of the Islamic Revolutionary Guard Corps of Iran immediately issued a notice via radio, announcing the re-blockade of the Strait of Hormuz, and issued a severe warning that any ship approaching the strait without permission will be regarded as "cooperating with the enemy" and illegal ships will be attacked.

According to Bloomberg ship tracking data, currently at least 135 million barrels of crude oil and refined oil are stranded on tankers in the Persian Gulf, unable to be transported normally. Throughout Sunday, almost no ships were observed passing through the Strait of Hormuz, and shipping completely came to a standstill.

Trump's Tough Statement: Dim Prospects for U.S.-Iran Negotiations

On the morning of Sunday, Trump posted a tweet on the Truth Social platform, stating in tough terms: "I hope they accept (the relevant agreement), because if they don't, the United States will destroy every power plant and every bridge in Iran. Don't expect me to be polite anymore!"

At the same time, Trump also announced that the U.S. military successfully seized an Iranian cargo ship attempting to break the blockade in the Gulf of Oman. Video released by the U.S. Central Justice Department showed that the missile destroyer USS Spruance carried out the interception mission.

Trump also revealed that a U.S. delegation will travel to Islamabad, Pakistan on Monday to hold a new round of negotiations on extending the temporary U.S.-Iran ceasefire agreement—which is set to expire this week. But Iran's state television quickly responded, clearly stating that Tehran's negotiators have no plans to attend the new round of negotiations for the time being.

Former U.S. Secretary of Defense Mark Esper, in an interview with Bloomberg Television, stated bluntly that it will be extremely difficult for the U.S. and Iran to reach an agreement within the next 48 to 72 hours. He pointed out that the U.S. and Iran have major irreconcilable differences on core issues such as nuclear enrichment, the return of nuclear fuel, and the future status of the Strait of Hormuz, and there is currently almost no room for reaching a consensus.

Relevant Iranian officials clearly stated that as long as the United States continues to maintain the maritime blockade on Iranian ports, the Strait of Hormuz will remain closed and will not be easily opened.

Other Key Market Focuses This Week

In addition to the U.S.-Iran geopolitical situation, there are several important events in the global market worth paying attention to this week, which may affect the market trend.

In terms of the earnings season, many well-known international companies such as Tesla, Intel, IBM, Boeing, and United Airlines will successively release their 2026 Q1 financial results this week, and their performance will have an impact on related sectors and the overall market trend.

Regarding the Federal Reserve, the U.S. Senate Banking Committee will hold the first hearing on Tuesday to review the nomination qualification of Kevin Warsh, the candidate for Federal Reserve Chairman nominated by Trump. The market generally expects that if Kevin Warsh is successfully appointed, he will support the Federal Reserve in advancing the interest rate cut process, which has also become the focus of market attention.

Elias Haddad, Head of Global Market Strategy at Brown Brothers Harriman & Co., stated in a report to clients that although the current market is under short-term pressure, the worst may be over. He believes that the United States' extreme stance of "all open or all closed" on the Strait of Hormuz may instead accelerate the re-opening of this key waterway, because the common economic losses caused by the continuous tense situation will prompt all parties to seek diplomatic solutions more actively. Elias Haddad expects that the U.S. dollar index will fluctuate within the range of 96 to 100 in the next few months.

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