Weekend’s Developments Push Brent Crude Prices (June Contract) Back Above $100/b

Markets

Talks between the US and Iran failed this weekend. The diametrically opposed US 15-point plan and Iran’s 10-point version turned out to be a weak foundation after all. JD Vance said that Iran refused to burry its nuclear ambitions, singling out one specific issue as reason for the collapse. Iran said its delegation approached the meeting in Islamabad in good faith, but that the US failed to gain Iranian officials’ trust. To add more and new pressure on Iran, the US announced a blockade of all maritime traffic entering and exiting Iranian ports from today 10 am ET (4pm CET). By effectively closing the Strait of Hormuz, the US wants to squeeze out Iranian oil (revenues) while avoiding having to seize the oil export hub (Kharg island). Indirectly, it might lead to some Chinese pressure as the country is the main buyer of Iranian oil. Simultaneously with the start of the “open for all or close for all” policy, the US navy will sweep the Straight in search of sea mines. Iran reacted that military vessels attempting to approach Hormuz under any pretext would be considered a violation of the ceasefire. US President Trump reacted, amongst others, by repeating his military threat in case “any Iranian fires at us”. This weekend’s developments push Brent crude prices (June contract) back above $100/b. They rise from just above $94/b on Friday to currently more than $102/b. US Treasuries cede ground with the curve currently bear flattening. US yields add 3 to 4 bps. The dollar’s gains are moderate at best (EUR/USD 1.1685 from 1.1730). Asian stock markets lose around 1%-1.5% after last week’s impressive short squeeze. The damage today is way smaller than last Monday’s relief rally as the ceasefire, while fragile, still stands. That gives both parties slightly over a week to get back on speaking terms. An end to the ceasefire is the trigger point to really dent risk sentiment. On bond markets, there’s the oil perspective. We’ve already moved beyond the point where higher energy prices start having non-linear effects on other prices/the real economy as well. Central bankers suggested they’ll use a more agile approach this time around to shield those upward inflation risks. From tomorrow on, several of them including ECB Lagarde and BoE Bailey have the opportunity to give an update on their reaction functions at the annual IMF/World Bank meetings. Even since the start of the ceasefire last week, money markets didn’t (completely) close the door on a near-term, April, rate hike especially in Europe. June action (and later) is more of a done deal. Today’s eco calendar is empty, leaving room for the Iran trade (higher energy prices) to play out.

News & Views

Peter Magyar’s Tisza party secured a landslide victory in yesterday’s Hungarian parliamentary elections. Obtaining a projected 138 seats out of the 199 up for grabs means the now-former opposition party has a two-thirds majority. Tisza has the power to rewrite the constitution and restore what the European Commission has slammed as breaches to the rule of law and an erosion of democratic standards in 16 years of Orban rule. The latter’s Fidesz party is projected to win 55 seats compared to 133 in 2022. Magyar’s campaign centered around the skyrocketing inflation triggering a cost-of-living crisis, stagnant economic growth, poor public services and endemic corruption. That resonated strongly with the public, which drew en masse to the ballot. The 78% turnout was higher than in any general election since the fall of communism in the 1990s. The victory of the pro-European Tisza puts Hungary on track for smoother European cooperation and the unblocking of some €20bn in funds. The Hungarian forint in early Asian dealings rallies to an almost three-year high around EUR/HUF 367.7.

UK hiring activity deteriorated only slightly last month, the KPMG and REC monthly job report found, with the geopolitical developments so far not having stopped the trend of labour market stabilization. Permanent staff appointments declined only marginally for the second month in a row, while temp billings decreased modestly. The surveyors linked exacerbated uncertainty because of the Middle East war as well as rising costs to the fall. Some companies are pressing ahead with their previously delayed hiring plans and have offered some counterweight but may remain cautious in doing so going forward until the economic fallout of the Gulf conflict becomes clearer. Overall vacancies fell at the softest pace since last May, the third deceleration in a row, suggesting the downturn for labour demand is also easing. With demand still low, however, and candidates rising sharply, starting salaries increased more slowly. Labour supply expanded at the quickest rate in 2026 to date.