Major U.S. stock indices traded in a mild, volatile range last week. The 10-year Treasury yield remained stable at 4.3%, the VIX volatility index hovered around 19, and the dollar index remained in the 98.8 range. Gold prices narrowly held above $4,700/ounce, but fell more than 2.5% for the week, recording its largest weekly drop in over a month. The two major benchmark crude oil contracts recorded gains of approximately 16% and 13% respectively, highlighting earlier market panic pricing in a potential Strait of Hormuz blockade. With geopolitical factors easing somewhat, investors turned their attention to the latest developments in U.S. domestic politics, with a group of Democratic members of the House of Representatives actively pushing for impeachment proceedings against President Trump.

In addition, the market focused on the Justice Department's decision to terminate its investigation into Federal Reserve Chairman Powell, removing a major obstacle to the confirmation of Trump's nominee for Fed Chair, Warsh. Prosecutors have instead requested the Fed's internal oversight body (the Office of the Inspector General) to review cost overruns in the renovation of the Fed headquarters building. Previously, a federal judge had blocked subpoenas against the Fed, finding little evidence of wrongdoing on Powell's part.

US President Donald Trump said on Saturday (April 25) that he had canceled plans to send US Special Envoy Steve Witkoff and his son-in-law Jared Kushner to Pakistan. However, a senior Iranian official stated that Iran had no plans to meet with US negotiators. Iranian Foreign Ministry spokesman Esmaeil Baqaei also clarified on Friday evening: "No talks between Iran and the United States have been arranged. Iran's position will be conveyed through Pakistan."

Last Week's Market Performance Recap:

Last week, US stocks were mixed, but the S&P 500 and Nasdaq Composite closed at record highs. Earlier reports that peace talks between the US and Iran might soon be held in Pakistan boosted market risk appetite. Meanwhile, Intel's strong earnings report reignited enthusiasm for AI deals, driving the semiconductor sector higher, and Nvidia's market capitalization once again surpassed $5 trillion. The S&P 500 rose 0.8% to 7,165.08, while the technology-heavy Nasdaq Composite gained 1.63% to 24,836.60. Both indices hit record highs during the session. However, the Dow Jones Industrial Average fell 79.61 points, or 0.16%, to 49,230.71.

Last week, gold prices narrowly held above $4,700 per ounce, but fell more than 2.5% for the week, recording its biggest weekly drop in over a month, closing at $4,709 per ounce. This was due to a stronger dollar, rising bond yields, and growing market expectations that persistent inflation would keep interest rates high for an extended period, thus diminishing the appeal of non-yielding gold. Furthermore, although uncertainty surrounding the situation in Iran increased during the week, market optimism regarding renewed negotiations emerged towards the end of the week, with bargain hunting appearing near the key support level of $4,650-$4,700.

Spot silver was quoted around $75.600 per ounce last week, retreating from its highs throughout the week and exhibiting significantly greater volatility than gold. It rebounded at the beginning of the week but continued to decline in the latter half, shifting from high-level consolidation to a weak downward trend. Bulls lacked strength, and bears dominated, resulting in a bearish weekly close. Silver prices rebounded slightly at the beginning of the week, reaching a high above $83.00 and briefly rising above short-term moving averages.

The US dollar index lost momentum near the 98.50 price zone at the end of last week, continuing to decline from recent highs. Despite strong US data and ongoing tensions in the Middle East, the market is giving back some of the dollar's gains. Profit-taking near the weekend and a moderate pullback in US yields put pressure on the dollar, although oil prices remained above $90 this week, and inflation concerns persist.

Due to uncertainty surrounding the situation in the Gulf region, investors are likely unwilling to allow their dollar holdings to turn negative. The 5-year to 5-year dollar inflation swap rate rose from 2.40% this week to 2.50%—the highest level since early February. The US dollar index is poised to rise to around 99.15/26; a break above this resistance level could lead to further gains towards 99.50.

The euro/dollar is trading around 1.1720, with a slight rebound driven by a weaker dollar. However, gains are limited due to cautious market sentiment and positioning ahead of the ECB meeting. The dollar/yen pair retreated from the 159.88 area to 159.35 before the weekend due to a weaker dollar. Despite the pullback, the pair remains high overall, influenced by yield differentials, while Japanese officials continue to warn of excessive yen weakness and the risk of intervention remains high.

The pound/dollar rose to the 1.3530 area, supported by a weaker dollar. The pound benefited from a shift in dollar flows, although rising energy prices still pose risks to the UK inflation outlook and the Bank of England's policy path. The Australian dollar/US dollar climbed to the 0.7150 area over the weekend, gaining momentum as the dollar weakened and risk sentiment stabilized. Despite solid US economic data released earlier this week, the dollar weakened slightly as the market took profits on its recent strength. A moderate decline in US Treasury yields, coupled with a slight improvement in overall risk sentiment, suppressed the US dollar's performance, creating room for the Australian dollar to rise.

Last week, WTI crude oil exhibited a "decline followed by a rise, with a bullish bias at high levels" trend. Crude oil prices rebounded from an initial low of $85.00 at the beginning of the week, further surging to around $97.02 before the weekend, approaching the $100 mark. Technically, although oil prices rose and then fell back, the price action effectively broke through numerous resistance levels, indicating a potential for a strong reversal. As previously mentioned, fundamentally, the pressure of tight inventories at global upstream chemical companies and the potential for future restocking will continue to push up the valuation center of oil prices. At the same time, funds that have deeply invested in the market were unable to exit during the sharp drop, necessitating a rebound in oil prices.

Last week, the cryptocurrency market remained under pressure. Macroeconomic signals from Japan, one of the world's largest economies, exacerbated the uncertainty surrounding the Iran-Iraq conflict. According to CoinDesk data, Bitcoin hovered around $77,800, failing to break Thursday's high of $78,700 during early Asian trading. The overall upward trend that began in late March around $65,000 appears to have stalled since Wednesday.

The yield on the 10-year US Treasury note changed slightly, remaining at 4.32%, as traders continued to focus on developments in the Middle East. Al Jazeera reported that government sources indicated a "high probability of a breakthrough" in negotiations between the US and Iran in Islamabad, with a delegation led by the Iranian Foreign Minister expected to arrive in the Pakistani capital tonight. The market widely expects the Federal Reserve to keep the federal funds rate unchanged next week, with no further rate changes anticipated for the remainder of the year.

Market Outlook for This Week:

This week (April 27 - May 1), global financial markets will witness a "super collision" of central bank interest rate decisions and economic data.

From the flurry of pronouncements from the five major central banks—the US, UK, ECB, Japan, and Canada—to the release of key data such as core inflation and manufacturing sentiment, and the intertwined impact of geopolitical and policy maneuvering, each event could trigger significant asset price volatility.

With multiple variables converging, market uncertainty is rising. Investors need to accurately grasp the core logic and proactively plan to address potential opportunities and risks.

The Bank of Japan will kick off this week's global central bank interest rate meeting, with the market expecting it to maintain its 0.75% interest rate. Following this, the Bank of Canada will announce its interest rate decision, with the market expecting it to remain at 2.25%.

The week's grand finale will take place on Thursday (April 30th), with the Federal Reserve, the Bank of England, and the Eurozone central bank all announcing their interest rate decisions on the same day.

The market expects the Federal Reserve to maintain its interest rate at 3.5%-3.75% (CME's "FedWatch" shows a 99% probability of maintaining this level), the UK to maintain its rate at 3.75%, and the European Central Bank to maintain its three key interest rates at 2.15%, 2.4%, and 2%.

Regarding risks this week:

Geopolitical and policy variables require close attention.

Besides core economic data, investors should be wary of three potential risks:

First, the escalating conflict in the Middle East and the recurring Russia-Ukraine conflict, coupled with the escalating power struggle between the Trump administration and the media, could trigger increased risk aversion, benefiting safe-haven assets such as gold and the US dollar.

Second, speeches by central bank officials from the Federal Reserve, the European Central Bank, and the Bank of Japan could signal a policy shift. For example, the Bank of Japan hinting at a June rate hike and the ECB mentioning further rate cuts could quickly revise market expectations, causing sharp short-term fluctuations in corresponding currencies.

Third, if international trade frictions escalate again, increased uncertainty surrounding US trade policy will suppress global risk asset sentiment and drag down data from export-oriented economies.

This week's conclusion:

Uncertainty over the Strait of Hormuz is causing market tension and a weaker US dollar.

As the situation in the Strait of Hormuz continues to evolve, the market is fluctuating between relief and renewed caution. Earlier reports confirmed that this important oil bottleneck is "fully open and ready for full passage," alleviating concerns about long-term supply disruptions.

However, new developments have complicated the situation. Reports indicate that if the US continues its naval blockade, Iran may consider closing the Strait of Hormuz again, warning that such a move would be considered a violation of the ceasefire agreement.

WTI crude oil prices fell sharply to around $83.00 per barrel as the reopening of the Strait of Hormuz eased supply concerns and risk premiums declined. However, prices could still surge suddenly if geopolitical tensions escalate again.

Meanwhile, despite reduced safe-haven demand, gold surged to around $4,865, reflecting continued uncertainty and escalation risks in the Middle East.

In Asia, the People's Bank of China will set the loan prime rate (LPR), Japan will release trade data and inflation figures, and will jointly release the Purchasing Managers' Index (PMI) with India and Australia.

The final verbal sparring between the US and Iran escalates; a glimmer of hope for peace remains.

The fragile ceasefire agreement between the US and Iran is nearing its expiration, and the war of words between the two sides continues to escalate. Both sides are raising their bargaining chips ahead of a new round of peace talks, further intensifying tensions. The most likely outcome of the second round of talks in Islamabad is a roadmap rather than a permanent agreement. Despite numerous difficulties in the negotiations, all parties are still preparing for the second round of talks in Islamabad, and a glimmer of hope for peace remains.

Key details of the current US-Iran relationship are becoming increasingly blurred.

With the ceasefire nearing its end, the prospects for further peace talks and key details of the current US-Iran relationship are becoming increasingly unclear. Trump is wavering between resuming his hardline rhetoric and hinting that Washington is prepared to hold more talks with Iran.

Amid escalating tensions, a US delegation is preparing to travel to Pakistan for a potential second round of peace talks. A source familiar with the matter said the US delegation "plans to travel to Islamabad soon."

Iran has repeatedly denied participating in the meeting. According to The New York Times, citing two Iranian officials, the Tehran delegation plans to travel to Islamabad on Tuesday for the talks.

The first round of talks in Islamabad, led by US Vice President Vance and US special envoys Steve Witkoff and Jared Kushner, ended on April 12 without reaching any solutions on thorny issues such as Iran's nuclear program.

The United States and Iran reached a two-week ceasefire agreement on the evening of April 7. This temporary truce has faced increasing pressure throughout its short duration, with both sides accusing each other of violating its terms.

Trump stated on Monday that the ceasefire would expire "Wednesday night Washington time," potentially buying additional time for negotiations. He added that he was unlikely to extend the ceasefire beyond Wednesday and would not open the Strait of Hormuz until an agreement was reached with Tehran. When asked if he expected fighting to resume immediately if no agreement was reached, Trump said, "If there's no agreement, I certainly expect that."

Prospects for the Second Round of Talks in Islamabad: Roadmap Rather Than Permanent Agreement

A diplomatic roadmap, rather than a permanent solution, is the most realistic outcome of the Islamabad talks. Considering the more than two years of negotiations surrounding the 2015 Iran nuclear deal before a preliminary framework was reached, expecting a genuine peace agreement is overly optimistic.

According to multiple media reports, Vice President Vance, along with officials from the National Security Council, the State Department, and the Pentagon, will form the US delegation to participate in the talks in Pakistan on Tuesday.

Former senior U.S. diplomat Alan Eyre, who participated in the 2015 Iran nuclear deal negotiations, pointed out that U.S. negotiators may be at a disadvantage when negotiating with Iran's experienced diplomatic team. The Iranian team consists of "professionals familiar with their duties," while the U.S. lacks equivalent expertise in international relations.

Eyre stated that unless the U.S. brings "a competent team of experts they trust, they will be overwhelmed." He added that the "best and most realistic outcome" of the potential negotiations would be an agreement on general principles and an extension of the ceasefire.

Nuclear Material Disposal and the Strait of Hormuz: Core Bottlenecks in Negotiations Remain Stalemate

The fate of Iran's nuclear materials remains a key sticking point in the negotiations. Trump stated last Friday that Iran had agreed to transfer its highly enriched uranium stockpile to the U.S., but Iran denied this claim within hours.

Trump tweeted again on Truth Social late Monday, reiterating that Operation Midnight Hammer, launched by the US in June 2025, successfully struck three key facilities of Tehran's nuclear program, achieving "complete destruction of the nuclear dust sites," and stating that "dredging and cleanup will be a long and difficult process."

The US and Iran are also locked in a fierce standoff over maritime traffic in the Strait of Hormuz. Trump vowed to maintain the blockade of Iranian ports, while Tehran reiterated its military control of this crucial waterway. This chokepoint normally handles 20% of the world's oil and gas shipments.

Tensions in the Strait escalated further when Iran's Foreign Ministry accused the US of attacking an Iranian merchant ship and demanded the release of its crew. Over the weekend, the US Navy fired on and seized an Iranian-flagged cargo ship attempting to circumvent the blockade, the first major action since the blockade began. Meanwhile, Iran fired on two vessels attempting to pass. This latest escalation puts both sides on the brink of collision as the Islamabad negotiations close in.

Any escalation, especially military action near the Strait of Hormuz, could trigger a new surge in oil prices and widespread risk aversion. He pointed out that the uncertain prospects for peace negotiations have led to much speculation in the market about when energy transport through the Strait of Hormuz will resume.

Conclusion:

The ceasefire window is closing; a glimmer of hope for peace remains.

As the deadline approaches, both the rhetoric and actions of the US and Iran demonstrate a high degree of tension. Despite the numerous difficulties facing the negotiations, all parties are still preparing for the second round of talks in Islamabad.

Whether the final outcome will be a diplomatic breakthrough or a resurgence of conflict will gradually become clear in the coming days, and the global energy market and geopolitical landscape will be directly and profoundly affected.

The ceasefire extension negotiations failed to reach an agreement, and the US dollar quietly rose?

Geopolitical tensions in the Middle East have escalated again, potentially pushing the US dollar index up for the first time this month. The seizure of ships in the Strait of Hormuz, coupled with disagreements between the US and Iran over ceasefire, blockade, nuclear issues, and control of the strait, has effectively closed the strategic waterway, sending oil prices back above $100. This energy shock has not only dampened global economic growth expectations but also reshaped risk appetite in the foreign exchange market, with the US dollar once again becoming a popular safe-haven asset.

Geopolitical Conflicts Drive Demand for the US Dollar as a Safe Haven

The recent escalation of conflict in the Middle East, exemplified by the seizure of ships, has further heightened tensions. While the ceasefire agreement has been extended, there are no signs of substantial progress in peace negotiations. This has effectively closed the Strait of Hormuz, a vital global oil shipping route, triggering a rise in energy prices. Brent crude oil prices have risen to around $102 per barrel, with market concerns about global supply chain disruptions significantly increasing.

Against this backdrop, investors are reassessing risk asset pricing, and the peace premium previously accumulating due to the potential for peace is gradually fading. The US dollar index has rebounded from recent lows, and traders are inclined to slightly increase their dollar positions. The path of least resistance in the current market remains maintaining and slightly increasing dollar positions, a dynamic reflecting a resurgence in risk aversion. The dollar was a major beneficiary in the early stages of the conflict, but earlier this month, the prospect of peace briefly drove investors to higher volatility currencies; now, the fluctuating situation has led to a renewed preference for the dollar.

High oil prices have not only increased inflationary pressures but also weakened consumer confidence and essentially erased market expectations for interest rate cuts by major central banks this year. The global economy faces the direct impact of rising energy costs, and the dollar has demonstrated strong stability in this uncertain environment.

Major currency pairs showed divergent performance.

The euro fell below 1.17 against the dollar, hitting its lowest level since April 13, potentially its first weekly decline in four weeks. The dollar hovered around 159.50 against the yen, close to 160, a level considered a potential red line for official intervention. The Bank of Japan is expected to keep interest rates unchanged next week but has hinted at the possibility of a rate hike in June. This has made the yen relatively restrained in terms of safe-haven demand, but it remains under pressure.

The US dollar index rose slightly below 99.00, with a cumulative gain of about 0.55% this week, potentially ending a four-week losing streak.

Central Bank Policy Divergence Intensifies Market Expectations

Interest rate market pricing indicates that traders believe there is about a 25% probability of a Federal Reserve rate cut this year, while the European Central Bank may face two rate hikes in 2026. However, market strategists believe the US is relatively well-positioned to address the current energy shock, thus viewing a dollar pullback as a potential opportunity, especially if the dollar index does not fall below 98.

With the Bank of Japan's interest rate decision meeting approaching, expectations of maintaining the current policy dominate, but potential action in June adds uncertainty to the yen's trajectory. UK consumer data has already shown the early impact of rising energy prices on spending behavior, indicating that inflation transmission is underway.

Global Liquidity Considerations Under the Energy Shock

The Middle East conflict has lasted for nearly two months, and high fuel prices are not only dampening consumer confidence but also potentially affecting broader economic activity through cost-push inflation. Furthermore, it has been reported that the US is considering a currency swap arrangement with the United Arab Emirates. This is seen as a precautionary measure to address potential credit and liquidity pressures.

Conclusion:

The US dollar index is currently in a typical risk-driven upward phase, with geopolitical tensions and inflation expectations being the dominant factors. Until the situation in the Strait of Hormuz eases, safe-haven demand will continue to support the dollar. Meanwhile, high energy prices are raising inflation and delaying expectations of interest rate cuts, further strengthening the dollar's advantage. In the short term, the dollar may maintain a slightly bullish oscillating pattern, but the risk of a technical correction should be noted. The medium-term trend will depend on the evolution of the geopolitical situation and changes in monetary policy expectations.

Traders are closely watching any progress in peace negotiations and the further impact of energy market dynamics on global growth expectations.

Uncertainty surrounding Fed policy weighs on silver; silver remains in a consolidation phase.

Affected by uncertainty surrounding the Fed's policy outlook, silver prices have fallen back to around $80/ounce. The market is focused on the policy signals released at the Fed Chair nominee hearings, while geopolitical tensions and changes in inflation expectations have a two-way impact on silver prices. Technically, prices remain in a consolidation phase, and the short-term direction remains to be confirmed.

From a fundamental perspective:

From a fundamental perspective, the market focus is on the uncertainty surrounding the Fed's policy outlook. Investors are closely watching the Fed Chair nominee hearings to determine the future direction of monetary policy. The market had already priced in the US policy stance, particularly a cautious approach to quantitative easing and a tendency to support a strong dollar. Historically, this expectation has significantly suppressed precious metals, hence the current bearish market sentiment.

Furthermore, statements from the US regarding monetary policy are also influencing market expectations. If future policies lean towards maintaining higher interest rates, it will weaken the attractiveness of non-yielding assets, thus putting pressure on silver prices.

From a geopolitical perspective:

Regarding geopolitical tensions, the market's reaction to the Middle East situation is relatively complex. While progress in related negotiations has released some signs of easing, its support for silver is limited. Typically, easing geopolitical risks push oil prices down, thereby suppressing inflation expectations, which are beneficial for precious metals. However, the current market is more focused on policy factors, weakening this logic.

From an inflation perspective:

From an inflation perspective, market expectations for the future inflation path remain divergent. Continued fluctuations in energy prices could disrupt inflation, thus affecting central bank policy decisions. Against this backdrop, silver prices exhibit a clear volatile characteristic.

From a technical perspective:

On the daily chart, silver is maintaining a sideways consolidation structure. Prices are fluctuating around the 20-day moving average, indicating an unclear trend. Currently, an ascending triangle pattern has formed, suggesting that volatility is gradually converging, and the market is awaiting a directional move. In terms of momentum indicators, the RSI is around 54, in the neutral-to-strong zone, indicating that the market still has some upward momentum, but no overbought signal has appeared. On the upside, $81.52 is a key resistance level; a successful break above this level could push prices further towards the $85.46 area. On the downside, $76.50 is a significant support level; a break below this level could trigger a deeper correction, targeting the psychological level of $70.00.

Conclusion:

Overall, silver prices are currently at a crossroads between policy expectations and technical consolidation, with the short-term direction still unclear.

Silver prices are under short-term pressure, mainly influenced by the uncertainty surrounding Federal Reserve policy and expectations of a strong dollar. Although geopolitical tensions and inflation expectations provide some support for precious metals, the market is currently more focused on changes in the interest rate path. Technical analysis indicates that prices are in a consolidation phase, potentially facing a directional move. Investors should closely monitor the breakouts of the 81.50 resistance level and the 76.50 support level to determine the next move.

The Strait of Hormuz is pushing the oil market towards structural collapse.

Disruptions to shipping through the Strait of Hormuz are tantamount to severing a vital artery, triggering substantial supply shortages, declining inventories, and refinery production cuts—all caused by insufficient supply rather than weak demand. Global oil trade is fragmenting into regional blocs, with oil flows increasingly influenced by geopolitical forces rather than price factors, signaling a structural shift in the market.

Currently, the oil market is entering unprecedented uncharted territory. Previously, the language of the oil market was built on price discovery, marginal barrels, and supply-demand balance. However, in every crisis, there is a moment when this language quietly but dangerously loses its meaning. For the oil market, that moment has arrived.

What the market is witnessing is not a simple supply disruption, but a real-time structural collapse: the mechanisms that have dominated global energy flows for decades are crumbling, and market dynamics and stability are being fundamentally altered.

The fragility of the oil market has been warned of many times.

This situation is not surprising. For years, the market has warned of the increasing fragility of the global oil system. It is not only highly dependent on a few key chokepoints, but also built on the assumption and expectation that "energy flows will not be interrupted." For most oil market observers, even in the most pessimistic scenarios, they habitually believe that price will be the ultimate balancing mechanism.

Traditional theory generally points out that higher oil prices will stimulate supply, suppress demand, and eventually restore equilibrium. However, reality is giving this assumption a brutal test, exposing the enormous risks of over-reliance on price signals in a fragile structure.

The Strait of Hormuz Closure: The Global Energy Artery Cut Off

While some still view the closure of the Strait of Hormuz as just another ordinary geopolitical disturbance, as indicated by the statements and policies of global leaders, especially the EU, it must now be seen as the removal of the single most important artery in the global energy landscape. Whether partial or near-complete, this removal will have profound implications.

It is well known that approximately one-fifth of the world's oil and liquefied natural gas are transported via this narrow waterway. The current loss of over 13 million barrels per day is a loss that cannot be absorbed by the market simply through price signals; it highlights the potential risks of widespread supply disruptions and market instability.

The Discrepancy Between Financial Market Appearances and Real Market Truth

Currently, financial markets are, to some extent, masking the immediate impact of the crisis. Fluctuations in oil prices, and even occasional pullbacks, actually reflect traders' persistent skepticism about the authenticity, duration, and structural damage of this disruption.

However, the picture in the real markets is far more severe than it appears, even appearing bleak. The decline in refinery utilization rates in Europe and Asia is not due to demand destruction, but rather to insufficient feedstock supply. Storage dynamics deserve close attention: crude oil inventories are being depleted at an accelerating rate, and not only crude oil, but also petrochemical product inventories are declining rapidly. The entire market is self-consuming.

Refinery Dilemma: Supply Constraints, Not Weak Demand

Policymakers, politicians, and financiers need to correct several key misconceptions. First, declining refinery utilization rates do not equate to weakened demand; quite the opposite, it's a direct manifestation of supply chain constraints. European refineries are in a dilemma: their operating environment was already strained for years due to underinvestment and reduced Russian oil supplies caused by the Russia-Ukraine conflict. Now, the conflict in Iran and the Strait of Hormuz issue have further exacerbated the pressure. On the other side of the world in Asia, refineries, especially in highly import-dependent economies like South Korea and India, have shifted their procurement strategies from optimization to survival.

Timelines are more important than headlines right now. Crude oil is not delivered instantly. Until now, European and Asian refineries can still operate on oil shipped weeks earlier. Once these early shipments are unloaded and consumed, reality will quickly emerge: there will be no substitutes. Optimistically, by early May, the illusion of normalcy will begin to crumble; by mid-May, it will be completely gone.

Inventory buffers are nearing their limits, and the US is unlikely to be a savior.

Policymakers need to reassess the domestic inventory situation. Market indicators show that commercial inventories, acting as a last-ditch buffer, are far thinner than publicly acknowledged. OECD commercial crude oil inventories have declined for several consecutive months and are now nearing operational lows. Calls for the release of strategic petroleum reserves may arise again, but this would only provide temporary relief and cannot replace sustained normal flow.

Optimistic expectations for the US are equally unfounded. In media reports, the US is often portrayed as a "swing supplier" in the market, but its export capacity is actually limited, and domestic political pressures are beginning to prioritize domestic supply over the global market. It is important to emphasize that this discussion is not about US oil companies as a whole, but rather about individual companies with shareholders.

Fragmentation of the Oil Market: Increased Competition Among Regional Sectors

Another unsettling reality is that the oil market is fragmenting into regional sectors in real time. The world no longer has a single, flowing oil market, but rather three relatively independent markets: Europe, Asia, and North America. These sectors are all competing for dwindling available oil resources, each facing its own constraints and political priorities.

Europe is under immense pressure. For the past two years, the continent has been restructuring its energy framework, moving away from dependence on Russian hydrocarbons and towards seaborne imports from the Middle East, the US, and West Africa. The closure of the Strait of Hormuz, resulting in a supply loss of over 13 million barrels per day, has directly impacted Gulf oil that previously flowed to Europe. Even with the US maintaining high export levels, it cannot fully fill the gap in crude oil and refined products.

After decades of underinvestment and even closure, European refineries no longer have the capacity to flexibly adapt to all types of crude oil. Replacing Middle Eastern crude with other types will result in both technical and economic inefficiencies for refineries, further tightening the refined product market. Diesel, already structurally scarce in Europe, is expected to be among the first major victims, followed by jet fuel and gasoline, with the effects spreading to transportation and industry, ultimately driving up consumer prices.

Asia faces similar challenges, but in a different nature. For decades, Asia has been the largest importer of Middle Eastern crude oil, and this dependence is structurally increasing. While major Asian powers and India have benefited from discounted Russian oil, they are currently unable to fully compensate for the loss of Gulf supplies. South Korea and Japan, with their limited domestic resources and extremely high import dependence, are particularly affected.

Energy security is replacing efficiency, and geopolitical power is dominating oil prices.

While competition for crude oil, fuels, and chemicals has emerged, it is not yet fully apparent. Long-term contracts are being renegotiated, spot markets are increasingly strained, and logistics chains need to be restructured at high cost. This shift is not only geographical but also strategic. After decades of globalization and liberalization, energy security is making a strong comeback as a core strategy and risk.

In the coming years, energy security will take precedence over efficiency, reversing decades of globalization in oil trade.

However, these changes do not yet fully reflect the scale of the crisis. While logistical issues are serious, the more fundamental problem lies at the political level.

The assumption that the Strait of Hormuz can be reopened through negotiations is increasingly detached from reality. Although diplomats and policymakers still believe in diplomatic means, the reality is quite different. The balance of power within Iran has decisively shifted to the Islamic Revolutionary Guard Corps, whose strategic logic differs fundamentally from that of civilian decision-makers. For the Islamic Revolutionary Guard Corps (IRGC), control of the Strait of Hormuz is not merely a bargaining chip, but a core pillar of its regional power projection.

Recent events have highlighted this shift. When the Iranian government announced the reopening of the Strait of Hormuz, the Islamic Revolutionary Guard Corps (IRGC) reacted in stark contrast. The IRGC ceased merely signaling; it began enforcing the order. Ships now require explicit approval for passage, and navigation is driven by military command rather than commercial logic. The contradictory statements between Iranian civilian officials and hardline commanders expose a fragmented national structure where diplomacy is largely a formality, while actual control remains firmly in the hands of the hardline, extreme military bloc, the IRGC. Ground evidence suggests that the IRGC has marginalized moderates and is pursuing a hardline strategy that refuses any negotiation.

Global oil market observers, politicians, traders, and financiers should recognize that this is no accident. Iran's actions have evolved into a deliberate, long-term war strategy: selective closure, controlled escalation, and maximum economic pressure on global markets. By transforming the Strait of Hormuz into a controllable chokepoint, Iranian hardliners retain leverage, avoiding full-blown military confrontation while maintaining control over the world's energy lifeline.

This is an "all or nothing" strategy unfolding over a long timeline. They are exploiting the West's dependence on stable energy flows and its political aversion to persistent disruptions. Through a layered maritime denial strategy, they are able to create uncertainty and increase systemic costs.

Price Signals Fail: Power Becomes the Dominant Force in Determining Oil Flows

This brings about the third, and perhaps most profound, shift in the oil market: price has been superseded by power as the primary determinant of oil flows. In a normally functioning market, scarcity leads to higher prices, ultimately stimulating supply and suppressing demand, thus restoring balance. However, when geopolitical actors physically restrict supply, prices lose their balancing function. Because if the transport routes themselves are blocked, no matter how high the price, actual oil delivery cannot be achieved.

In such a reality, the oil market will no longer be unified, but fragmented. Once in this state, it is difficult to quickly return to normal.

Conclusion:

The market is currently in a tense wait-and-see state again, awaiting further developments in the US-Iran stalemate, with neither side committing to restarting negotiations nor escalating military action. While new developments are still possible before the weekend, and the probability is not low, it's clear that market attention to the conflict is declining.

Overall, the core theme of the market has gradually shifted from "interest rate cut expectation trading" to "geopolitical factors and inflation repricing." The continued rise in oil prices is changing the logic of global asset pricing. If the Strait of Hormuz remains closed to navigation for an extended period, inflationary pressures will solidify further, forcing central banks to maintain a tighter or higher-interest-rate environment for a longer time. In this scenario, the US dollar remains supported, while gold is under short-term pressure but its medium-term logic remains unchanged. Crude oil will maintain high-level fluctuations, and US stocks, especially the Nasdaq, face a crucial test—whether to continue the liquidity-driven rise or experience a trend reversal under macroeconomic pressure. The future market direction depends not on the data itself, but on the core variable of "whether the conflict eases."

Overview of Important Overseas Economic Events and Matters This Week:

Monday (April 27): UK April CBI Retail Sales Balance; Germany May GfK Consumer Confidence Index

Tuesday (April 28): Japan March Unemployment Rate (%); Australia ANZ Consumer Confidence Index for the Week Ending April 26; Japan's Bank of Japan Policy Benchmark Interest Rate for April 28 (%); US April Conference Board Consumer Confidence Index

Wednesday (April 29): Australia Q1 CPI QoQ (%); Eurozone April Economic Sentiment Index; Eurozone April Consumer Confidence Index Final Reading; US March Durable Goods Orders MoM (%); US March Wholesale Inventories MoM Preliminary Reading (%); US EIA Crude Oil Inventory Change for the Week Ending April 24 (in thousands of barrels); Bank of Canada Interest Rate Decision and Monetary Policy Report

Thursday (April 30): Eurozone April Harmonized CPI YoY - Unadjusted Preliminary Reading (%); Eurozone Q1 Seasonally Adjusted GDP QoQ Preliminary Reading (%); Eurozone March Unemployment Rate (%); UK April Bank of England Benchmark Interest Rate (%); Eurozone April ECB Main Refinancing Rate (%); US March PCE Price Index YoY (%); US Q1 Real GDP Annualized QoQ Preliminary Estimate (%); US April Chicago PMI; US April Federal Funds Rate Target Upper Limit (%)

Friday (May 1st): Japan April Tokyo CPI YoY (%); UK April SPGI Manufacturing PMI Final Reading; US April ISM Manufacturing PMI

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