Why global markets broke down at quarter-end
The central fault line is energy. The U.S. Energy Information Administration estimates that 20 million barrels a day moved through the Strait of Hormuz in 2024, equal to about 20% of global petroleum liquids consumption, while roughly one-fifth of global liquefied natural gas trade also crossed the passage. Asia is especially exposed: 84% of the crude and condensate and 83% of the LNG that moved through Hormuz in 2024 went to Asian buyers.
That risk is now embedded in crude prices. In a Reuters poll of oil-market analysts, Brent was forecast to average $134.62 a barrel under current disruption scenarios and could climb toward $200 if Iranian export facilities at Kharg Island are hit. “As long as transit through the Strait of Hormuz is affected, all Asian countries will feel the pinch,” DBS Bank analyst Suvro Sarkar told Reuters.
The damage in equities has been just as visible. A late-Friday sell-off on Wall Street left the Dow down 793.47 points at 45,166.64, more than 10% below its Feb. 10 record, while the S&P 500 lost 1.67% and the Nasdaq fell 2.15%. The CBOE Volatility Index closed at 31.05, its highest finish since April, as megacap tech and consumer names absorbed much of the pressure. Brent settled at $112.57 and U.S. crude ended at $99.64.
The market is also confronting a macro pivot. In a preview of next week’s U.S. jobs report, Reuters said traders are no longer pricing any further rate cuts this year and now see a modest chance of a 2026 hike. Payroll growth for March is expected at just 55,000, with unemployment seen holding at 4.4%, a difficult backdrop for stocks already dealing with higher fuel costs and rising Treasury yields.
What global markets are watching in Q2
The immediate question for investors is whether the oil shock stays temporary or hardens into something more damaging. If shipping through Hormuz normalizes and diplomacy gains traction, crude could cool quickly and some of the fear premium could fade. But if attacks spread to export infrastructure or shipping remains impaired, higher energy bills will ripple into freight, chemicals, aviation, food and household spending, keeping pressure on corporate margins and central banks alike.
There is recent precedent for how fast that repricing can happen. After the U.S. killing of Iranian commander Qassem Soleimani in 2020, oil and safe-haven assets jumped almost immediately. When Russia invaded Ukraine in 2022, Brent surged toward $100 and the S&P 500 slipped into correction territory. And in 2024, Red Sea attacks forced 47% more crude and fuel cargoes around Africa, reminding traders that shipping routes can move prices almost as fast as production outages.
That history explains why quarter-end positioning is only part of the story. The bigger issue is whether the Iran war leaves behind a durable premium in oil, inflation and interest rates. Until that answer is clearer, the second quarter is opening with investors paying more for energy, demanding more compensation for risk and treating every headline out of the Gulf as a market catalyst.
