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Week 3 of the Iran conflict saw an expansion of the war into the economic sphere, with Iran targeting vital energy infrastructure across the Middle East, including Qatar, Saudi Arabia, the UAE, and Kuwait. Entirely dependent on the Strait of Hormuz for their hydrocarbon exports, Qatar and Kuwait face a risk of recession. Commercial traffic through the Strait of Hormuz has plummeted to nearly zero.
Brent crude revisited, ten days later, the near-$120 intra-day high seen on March 9, before ending the week at $112. US pump prices have risen more than 30% while the IATA Jet Fuel Price Monitor reported an 82.8% increase in jet fuel prices since the start of the war, resulting in massive flight cancellations and surging airfares.
Beyond oil, the Middle East conflict is also affecting other supply chains. Hormuz has halted a third of the world’s seaborne fertilizer trade. The world’s largest helium production complex was also hit by Iran, Qatar said, and would take 3-5 years to fully repair. Helium is needed for semiconductor fabrication and cooling MRI machines. Qatar’s Ras Laffan Industrial City, the world’s largest LNG production hub, was also hit by Iranian missiles.
The World Trade Organization (WTO) warned that global trade growth would slow to 1.9% in 2026 from 4.6% in 2025. The World Food Programme (WFP) warned that supply chain disruptions and surging fuel costs are the most severe since the Covid-19 pandemic, pushing an additional 45 million people into hunger. The International Monetary Fund (IMF) remains cautious that the global impact depends on whether the conflict lasts weeks or months.
However, President Donald Trump has issued a 48-hour ultimatum to Iran, which ends on SGT 7.44 am on Tuesday, March 24, demanding the full opening of Hormuz or face the obliteration of its power plants. Iran's military has vowed to retaliate by targeting all US and Israeli energy, IT, and desalination infrastructure in the Gulf.
Saudi Arabia and Qatar have expelled Iranian diplomats, which effectively nullified the 2023 Beijing-brokered reconciliation with Tehran, a possible reason for Trump delaying his trip to China. Saudi Arabia and Qatar have officially "reserved the right to take military actions" in response to any strikes by Iran. Saudi Arabia officially granted the US military access to King Fahd Air Base to counter threats to the Red Sea coastline, a decision that effectively ended the kingdom’s cautious restraint in facilitating the US war effort. Qatar, traditionally the most active mediator with Tehran, has undergone the most radical shift by calling for a regional security alliance modelled after NATO.
Against this backdrop, US major stock indices –the Dow, S&P 500, and Nasdaq Composite Indices – enter this week under technical pressure, below their 200-day moving average for the first time since May 2025. The futures markets are bracing for more selling when US stock markets open on Monday.
While risk aversion typically leads to a flight to the USD, this haven appeal may be short-lived. The USD faces a hawkish wall following last week’s central meetings, which pitted a series of G10 rate hikes against a Fed pause. Furthermore, US Treasury bonds are under pressure as fiscal concerns mount, driven by the Pentagon’s request for a substantial budget increase for the Iran conflict. This environment mirrors the credibility hit the USD sustained following last year’s Liberation Day tariffs, where the concurrent sell-off in US stocks and bonds underscored growing stagflation worries.
Quote of the Day
“True individual freedom cannot exist without economic security and independence. People who are hungry and out of a job are the stuff of which dictatorships are made.”
Franklin D. Roosevelt
March 23 in history
In 1775, Patrick Henry proclaimed "Give me liberty or give me death" in a speech encouraging Virginia troops to join the American Revolutionary War.
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