Global financial markets suffered a severe blow as tensions in the Strait of Hormuz worsened. Brent crude surged over 6%, breaking through $114 and nearing a four-year high. The resulting inflation panic over the energy crisis triggered a sell-off in both stocks and bonds, with US equities retreating from highs and the 30-year Treasury yield surpassing 5%.
Direct clashes erupted between the US and Iran in the Persian Gulf, and the UAE's Fujairah port came under attack. Following Iran's warning against US efforts to clear the strait, Trump responded firmly, stating that any Iranian attacks on US vessels would face devastating retaliation. The strait has been under de facto blockade since late February.
Analysts point out that even if the conflict de-escalates, soaring energy costs and geopolitical risk premiums will continue to suppress the global economy, and market risk aversion is unlikely to dissipate soon.