Oil prices surged over 4% on Wednesday, with Brent crude hitting a one-month high above $116 per barrel, as President Trump indicated a prolonged blockade on Iran could be forthcoming. This development comes amid rising tensions in the Strait of Hormuz, where the blockade aims to pressure Iran while potentially impacting global oil supply and inflation. The market is now recalibrating expectations for oil prices, with analysts suggesting Brent could revisit March highs near $120 per barrel.
The financial markets are also bracing for upcoming US GDP data, expected to show a 2.3% increase in Q1. However, recent economic indicators, including weaker housing starts, have raised concerns about a potential GDP disappointment. A lower-than-expected growth figure could further shake market confidence already affected by geopolitical tensions, while inflationary pressures may intensify if oil prices continue to rise.
As central banks convene, including the Fed’s anticipated hawkish hold, market participants should prepare for potential volatility. The Fed’s stance on inflation and growth will be crucial, particularly as it sets the tone for upcoming meetings by the BOE and ECB, which could influence risk sentiment heading into May.
Source: xtb.com