Oil climbs above $100 as geopolitical tensions weigh on global markets

Market Commentary

Amid escalating Middle East tensions, commodities and safe havens drew sharp focus on Monday. WTI crude oil futures rose 3% to nearly $100 per barrel, paring intraday gains of up to 9% amid supply fears, while Brent crude surged 7% to $101.6 per barrel before easing 4.25% to below $100 by 20h14 SAST.  On President Donald Trump's orders, the US imposed a blockade on Iran-linked shipping near the Strait of Hormuz after talks with Tehran collapsed. Washington accused Iran of unchecked nuclear pursuits, drawing retaliation threats and escalating risks to this critical energy artery. An OPEC+ report showed the cartel's March 2026 output plummeting 7.9 million barrels per day due to Strait disruptions. Precious metals retreated, with gold down 0.42% at $4 727.42 an ounce and silver off 1.08%.

US stocks clawed back losses, supported by benchmark oil's pullback and softer yields despite the strife. The S&P 500 and Nasdaq 100 gained 0.40% and 0.60% respectively, powered by software and applications, while the Dow held flat. Talks led by US Vice President JD Vance with Iran collapsed, prompting President Trump to impose a blockade on tankers carrying Iranian energy. Oil and gas prices edged higher amid the tensions, but stable long-term bond yields limited stock market falls, suggesting investors see little threat of rising inflation.

Chipmakers and data centre plays slipped, Nvidia declined over 1%. Oracle, Palantir, CrowdStrike, and ServiceNow rallied more than 5% each. Banks and asset managers were mixed pre-earnings, exposing yield and private credit vulnerabilities. Goldman Sachs fell 4%, missing fixed-income, currencies and commodities revenue estimates.

Turning to Asia, China's 10-year government bond yield dipped to 1.79%, recently shedding 3.10 basis points. Japan’s Nikkei and Hong Kong’s Hang Seng decreased 0.74% and 0.97%, with the Shanghai Composite off 0.01%.

Locally, protracted conflict-driven oil price rises are amplifying inflation risks in South Africa, where dependence on imported fertilisers exposes agriculture to global volatility and prospective food price surges. Analysts warn that sustained oil gains could drive inflation above 4% in 2Q26, reversing progress towards the South African Reserve Bank's 3% target. This may compel the SARB, once poised for 2026 rate cuts, to pivot, with markets now anticipating a possible 25-basis-point hike. The rand endured added pressure from diplomatic tensions after the US reportedly denied accreditation to South Africa’s G20 finance meetings delegation in Washington (13–18 April).

European stocks pared early losses but still closed in the red on Monday, pressured by the intensifying US-Iran conflict and persistent Middle East energy supply fears. The Eurozone STOXX 50 fell 0.40% to 5 904, with the pan-European STOXX down 0.20% at 614. Banks retreated on rising yields – Société Générale, Santander and BNP Paribas each off nearly 1% – while Frankfurt's DAX 40 limited losses to 0.30% at 23 750 and the FTSE 100 eased 0.20%. Defensives weighed heavily: AstraZeneca and GSK dropped 1.80% and 0.50%, banks like HSBC, Lloyds, Barclays, and NatWest shed 0.50%-1.10%, and travel stocks EasyJet and International Airlines Group tumbled 2.60% and 1.30%.

Oil majors bucked the downtrend, BP and Shell rose 1% and 1.20% on firmer crude. BAE Systems soared over 2.50% with RELX up 1.80% to cap broader falls, while LVMH edged down 0.40% ahead of its post-bell first quarter revenue update.