Introduction: Markets Rise Following Trump's Comments on Iran War
Good morning, and welcome to our continuous coverage of business, financial markets, and the global economy.
Oil prices have declined and stock markets have rebounded after US President Donald Trump stated that the war with Iran would end "very soon." Speaking from his Doral resort in Miami, President Trump characterized the conflict in Iran as a "little excursion" that had concluded "much faster than we thought."
He added that his administration was "looking to keep the oil prices down," noting that prices "went artificially up because of this excursion." These remarks sparked a relief rally across markets, although Trump indicated that the war would not conclude within the next week.
Currently, the international benchmark Brent crude is down 6.8% to $92.19 a barrel, after having surged past $100 a barrel on Monday morning.
Stock markets in Asia, a region heavily exposed to higher energy prices, rose significantly. Japan’s Nikkei 225 share index increased by 2.5%, South Korea’s Kospi jumped 6%, and Hong Kong’s Hang Seng index rose by 2%.
While Trump suggested the war may end soon, he also warned that the US would strike Iran "TWENTY TIMES HARDER than they have been hit thus far" if Iran "does anything" to disrupt oil flow through the Strait of Hormuz.
Approximately one-fifth of global oil and seaborne gas tankers typically pass through the Strait, which has effectively been closed for a week, raising concerns about energy supplies and driving prices higher.
Tehran declared it would not allow "one litre of oil" to be exported from the region if US and Israeli attacks continue, according to Iranian state media citing a spokesperson for the regime’s Revolutionary Guards (IRGC) on Tuesday.
The Agenda
2.15pm GMT: Treasury Committee hearing with the Office for Budget Responsibility on spring statement 2026
Saudi Aramco to Export 70% of Normal Crude Shipments Within Days
Saudi Arabia’s state-owned oil company, Saudi Aramco, announced it will be able to export about 70% of its normal crude shipments within days. Amin Nasser, the chief executive of Saudi Aramco, stated during an earnings call that the company is working to increase exports at its Red Sea port, enabling about 5 million barrels per day to reach the global market without passing through the Strait of Hormuz.
"Immediately as the ports were starting to close, we ramped up production through the East-West Pipeline, which has a capacity up to 7 million barrels a day, most of it for export. Approximately 2 million barrels of that will be utilised supplying existing refineries in the western regions, which also export some of the products to the global market. We are ramping up. We should be reaching capacity in a couple of days.
…As I said, within a couple of days, we should be reaching the capacity on the East-West Pipeline, pending an availability of vessels which are currently en route."
However, Nasser cautioned that the ongoing Middle East conflict would have significant implications for the oil market if it persists.
Oil prices remain down this morning, with Brent crude falling 7.7% to $91.48 a barrel.
Renault to End Sale of Fuel-Only Cars by 2030
Renault has announced plans to cease sales of fuel-only cars by 2030 and to develop a new electric vehicle (EV) platform in partnership with Google. The French automaker is advancing its transition away from internal combustion engines.
The company stated, "By 2030, the brand is aiming for ... 100% electric sales in Europe and 50% outside Europe," adding that the transition will include its budget brand Dacia.
The EV sales will encompass hybrid vehicles, permitted under concessions made by the European Union earlier this year to assist automakers in achieving net zero targets and developing smaller EV models.
Renault plans to develop its new electric car platform with Google, based on Android technology. The goal is for 90% of vehicle functions to be remotely updatable, reducing update deployment time, and to support ultra-fast charging in as little as 10 minutes.
Volkswagen to Cut 50,000 Jobs in Germany by 2030
Volkswagen has announced plans to reduce its workforce in Germany by 50,000 jobs by 2030. The German automaker, which owns brands including Porsche, Audi, and Seat, has faced challenges from US trade tariffs, intense competition in China, and costly strategic shifts at Porsche.
The company reported a 44% decline in profit before tax in 2025, down to €9.3 billion, with revenue remaining largely flat at €322 billion.
Oliver Blume wrote in a letter to shareholders:
"In total, around 50,000 jobs are due to be cut by 2030 across the Volkswagen Group in Germany. As a result of collective bargaining agreements and downsizing measures, we managed to achieve cost savings of around €1 billion in fiscal year 2025 as planned. We are on course to meet our goal of achieving net annual cost savings of more than €6 billion across the Group by 2030."
Aramco Warns of 'Catastrophic Consequences' for Oil Market Amid Iran Conflict
Despite a sharp drop in oil prices this morning, with Brent crude down 8.7% to $90.37 a barrel, Saudi Arabia’s state-owned oil company has warned that ongoing disruptions in the Strait of Hormuz could have "catastrophic consequences" for the oil industry.
Amin Nasser, Aramco’s chief executive, highlighted the potential impact on aviation, agriculture, automotive, and other sectors.
"There would be catastrophic consequences for the world’s oil markets, and the longer the disruption goes on, and the more drastic the consequences for the global economy."
Nasser also noted that Aramco’s Ras Tanura refinery is being restarted following a small fire caused by an attack last week.
These remarks coincided with Aramco’s report of a 12% annual profit decline due to lower oil prices last year. The company also announced plans to buy up to $3 billion in shares in its first-ever buyback.
Market analysts suggest the Bank of England (BoE) may consider interest rate cuts this year, though a cut at the upcoming meeting appears unlikely, according to Kathleen Brooks of broker XTB.
"There is currently 0.4 rate cuts priced in for this year, and UK rates are expected to end the year at 3.65%, down from the current level of 3.75%. There is a 7.2% chance of a rate cut priced in for the BoE’s meeting next week.
While we doubt that a rate cut is on the cards, the Bank of England will need to use next week’s meeting to signal their future intentions. Will they look through the crisis in the Middle East as a temporary spike in commodity prices and focus on the weakening economy? Or will the situation have died down enough for them to signal that further rate cuts are coming, albeit with a small delay? Either way, next week’s meeting is still important for sterling and UK bond markets."
Market data indicates investors expect the BoE to maintain its base rate at 3.75% on 19 March. Prior to the Iran conflict, a rate cut at this meeting had an 80% probability priced in.
UK government bonds (gilts) rallied following Trump’s suggestion that the Iran war could end soon, easing inflation concerns. The yield on two-year gilts fell 0.12 percentage points to 3.84%, and 10-year gilt yields dropped 0.09 percentage points to 4.54%.
Gilt prices had been declining since the outbreak of war due to fears that higher inflation would prevent central banks from lowering interest rates.
Mohamed El-Erian, adviser to German insurer Allianz and former IMF chief economist, stated that the risk of lasting damage to oil markets and elevated inflation this year and next is underestimated.
His baseline forecast is that a 50% probability of rising inflation feeding into higher interest rates is nearer the mark.
El-Erian emphasized that the UK is particularly vulnerable due to a combination of low productivity, constrained budgets, and deep-seated inequality, unlike the US and EU, which face fewer of these issues.
He noted that Labour needs to increase spending to support the poorest households, but public finance constraints limit government flexibility. Low productivity also rules out strong economic growth as a solution.
The Bank of England’s single mandate to maintain inflation at 2% forces it to react, and the European Central Bank may follow suit despite economic slowdowns, while the US Federal Reserve, with a dual mandate, might delay rate hikes if the outlook worsens.
El-Erian suggested that some oil supply restrictions might ease if Saudi Arabia can increase output through a pipeline to the Red Sea, bypassing the Strait of Hormuz. The United Arab Emirates may also find alternative routes for oil export.
However, he warned that these measures would only limit price increases, not return prices to pre-crisis levels around $60 per barrel.
"There are also all the other things that make their way through the Straits of Hormuz, like fertilisers and liquid petroleum gas (LNG). That’s why I think of it as a supply chain shock.
…The [White House] didn’t seem to have a plan to deal with Iran effectively shutting the Straits of Hormuz, and that is a big problem. There were people who considered that as a possibility, but not the people who started it.
And it is not clear how this ends because even when the US president declares victory, we don’t know whether Israel or Iran will agree."
UK Economy Faces Low-Growth Pattern, Says Business Group
The British Chambers of Commerce (BCC) has downgraded its UK growth forecast for 2026 from 1.2% to 1%, warning that the country is "stuck in a low-growth pattern." The BCC anticipates that global uncertainty will push UK inflation to 2.7% before it falls back to 1.9% in 2027.
Unemployment is expected to rise to 5.5% in 2026, up from 5.1% in the previous forecast, with youth unemployment projected to peak at 17.1% in 2027 before declining slightly.
David Bharier, head of research at the BCC, said:
"The UK economy remains stuck in a low-growth pattern. Our forecast of just 1% growth in 2026 reflects weak productivity, subdued investment and cautious consumer spending.
The recent escalation of conflict in Iran risks interrupting progress made on inflation. Higher energy prices linked to it could keep inflation firmly above the 2% target and lead the Bank of England to hold the interest rate longer than expected.
Much depends on the duration of the conflict. Covid supply shutdowns showed how sudden stops put long term damage into the trading system.
At the same time, elevated labour costs, stemming from national insurance increases and new employment regulations could weigh on hiring decisions. That has the potential to push the unemployment rate higher, making it especially difficult for younger people to enter the jobs market.
Looking further ahead, our research shows that firms are increasingly adopting AI tools. While the immediate impact on employment is likely to remain limited, deeper integration could reshape the labour market more fundamentally. At the same time, it could offer an important opportunity to lift the UK’s persistently weak productivity growth over the longer term."
UK Consumer Confidence Declines Amid Iran Conflict
UK consumer confidence has dropped since the outbreak of war in Iran, according to Barclays. The bank’s index, which measures confidence in the UK economy, fell by two percentage points to 23%, erasing gains made earlier in the year.
Barclays surveyed approximately 2,000 people between 3rd and 6th March, shortly after the initial US-Israeli attacks on Iran. Around 80% of respondents expressed concern that the Middle East conflict would increase inflation.
Fuel costs, energy bills, and food prices were the primary concerns, with about 60% worried about the impact on their personal finances. Nearly half reported already taking steps to reduce energy consumption.
Barclays also found that consumer spending was sluggish before the conflict, with card spending rising only 1% in February, less than inflation. Spending on essentials declined by 0.6%, with many consumers seeking discounts and switching brands to save money.
Jack Meaning, chief UK economist at Barclays, said:
"The start of 2026 had brought positive signs of growth and improving consumer sentiment. A new, prolonged bout of uncertainty risks snuffing that out before it has had a chance to really get going."
This aligns with a report from the British Retail Consortium, which found retail sales grew just 1.1% to February, compared with a 12-month average of 2.3%.
The UK housebuilder Persimmon is the best performer in Europe today, with shares rising nearly 10% after reporting increased annual sales and profits.
Pre-tax profit rose 11% to £397.3 million, with revenue up 17% to £3.75 billion. New home completions increased by 12%.
However, Richard Hunter, head of markets at broker Interactive Investor, noted that the Iran conflict could weigh on the property sector. Although oil prices are falling, they remain elevated, fueling inflation concerns and reducing the likelihood of interest rate cuts.
"Whereas one or even two interest rate cuts had been priced in for this year, the current estimate is that there could actually be one rise, which would impact mortgage affordability.
That being said, there are a number of tailwinds which could yet revitalise the sector. More broadly, there remains a noticeable supply shortage of homes domestically and government reforms to planning should oil the wheels of being able to break ground. At the same time, the group noted that for some, inflation-beating pay rises and the relaxation of lending rules led to higher enquiry rates and has underpinned growth alongside wider mortgage availability."
Dean Finch, chief executive at Persimmon, said in a statement:
"Assuming the conflict with Iran and its impact is short, Persimmon is set to grow again in 2026."
FTSE Opens Higher, Joining Global Market Rally
The UK’s FTSE 100 index opened 1.4% higher this morning, continuing the global stock market relief rally.
European markets followed Asia's lead, with Italy’s FTSE MIB up 2.4%, Germany’s DAX rising 2.1%, and France’s CAC 40 increasing 1.9%. The Stoxx Europe 600, which tracks major companies across the continent, rose 1.5%.
European Gas Prices Decline
European natural gas prices also fell, with the Dutch month-ahead gas contract, the European benchmark, down 16% to €46.59 per megawatt hour (MWh), from a peak of €56 on Monday.
Susannah Streeter, chief investment strategist at broker Wealth Club, cautioned that ongoing fighting and the continued closure of the Strait of Hormuz may sustain investor concerns.
"Oil prices remain more than 25% higher than before the conflict began. Trump has pledged that the US Navy will provide a guard for tankers through the strait, but any timeline for that is highly obscured, with forces for now focused on taking out military infrastructure rather than becoming ship escorts.
Until a longer‑term resolution is found, companies and consumers are still set to pay the price for the attack by the US and Israel on Iran. The repercussions for an array of everyday costs affecting companies and households are becoming clear.
Prices at the pumps have already increased, and motorists are being warned to drive more conservatively to offset an expected further rise in costs. More generous fixed‑rate energy tariffs have been scrapped, and households are bracing for a rise in the energy price cap in July. Borrowing costs are set to stay elevated for longer due to the inflation pressures higher energy costs will bring, and better mortgage deals have been withdrawn."
Oil prices are down more than 6% this morning, with Brent crude at $92.19 a barrel, after peaking at just over $119 on Monday.
Jim Reid of Deutsche Bank noted that investors will monitor whether shipping through the Strait of Hormuz can recover from current low levels, especially after Saudi Arabia reduced oil production yesterday.
"Remember that the oil moves have been much more contained further out the futures curve, with December 2026 Brent futures currently trading at $74.95/bbl.
We will also be watching whether plans to release oil reserves materialise. Yesterday’s virtual G7 finance ministers’ meeting didn’t get to that point yet, with their statement saying they 'stand ready to take necessary measures,' and France’s finance minister said they were 'not there yet.' Overnight, Japan’s Finance Minister Katayama said that G7 energy ministers are expected to meet to discuss the process of oil reserve release today."
UK Consumer Confidence and Retail Sector
UK consumer confidence has weakened since the Iran conflict began, with Barclays reporting a decline in its confidence index. The uncertainty threatens to undermine positive growth signals observed earlier in the year.
Consumers are particularly concerned about rising fuel, energy, and food costs, with many already reducing energy usage. Retail sales growth has slowed, and the property sector faces challenges due to inflation and interest rate uncertainties.
This article was sourced from theguardian
