Global financial markets are experiencing a tense calm. The two-week ceasefire agreed between the United States and Iran on April 7 expires on Wednesday — and the critical question is whether President Donald Trump will agree to an extension.
The signals are mixed. On Tuesday, Trump expressed confidence that a “great deal” with Iran would be reached. At the same time, he warned that the US military was “ready” to strike Iran if no agreement was reached by the deadline.
The Strait of Hormuz as the Key Factor
The situation at the Strait of Hormuz, through which roughly 20 percent of global oil and liquefied natural gas supplies pass, is decisive for markets. After brief hopes of a full reopening last Friday, Iran again announced restrictions on shipping traffic on Saturday. The US naval blockade remains in place.
Oil prices have reacted accordingly. Brent crude is trading around 95 US dollars per barrel, West Texas Intermediate at approximately 89 US dollars. Both could spike significantly higher — analysts consider prices of 120 to 150 US dollars per barrel realistic in the event of a sustained closure.
Equity Market Reactions
Major indices have shown remarkable resilience. The S&P 500 trades near record highs, and the Nasdaq Composite has posted its longest winning streak since 1992 — 13 consecutive positive trading sessions.
Defense stocks, domestic US software companies, and energy names with production outside the Middle East are among the winners. Losers include airlines, travel operators, and energy-dependent industries.
What Investors Need to Know
Three scenarios are possible: First, a ceasefire extension — oil prices fall, markets continue rising. Second, limited conflict — moderate correction likely. Third, sustained Hormuz closure — much harsher consequences, particularly for European markets.
Historically, geopolitical crises have often been good buying opportunities. The question is whether we are already in an upward exaggeration. The next 72 hours will provide clarity.
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Read more in our topic hub: Topic Hub: Geopolitics & Your Portfolio
