Key points to remember:
- Brent crude soared above $115 a barrel on April 29 as Trump ordered preparations for a prolonged Iranian naval blockade.
- The IEA called the closure of the Strait of Hormuz the biggest supply shock on record, with 20% of global oil flows disrupted.
- The Federal Reserve is expected to hold rates steady today, with Chairman Jerome Powell’s comments on inflation risks at the center of attention.
Iran blockade fears push Brent crude higher, biggest increase since June 2022
Brent crude, the international benchmark, climbed above $115 a barrel on Wednesday, the highest level since June 2022, marking an eighth straight session of gains as concerns over global supply intensified. West Texas Intermediate (WTI) crude, the US benchmark, also rose above $102 a barrel, gaining for the third straight session, supported by growing uncertainty around global supply as US-Iran peace talks stalled and the Strait of Hormuz remains effectively closed.
The Strait of Hormuz normally handles about 20% of the world’s oil and liquefied natural products. gas shipments. Since late February, Iran has limited tanker traffic through the chokepoint to near-zero levels in response to U.S. military pressure. Ongoing tensions between the United States and Iran and the effective closure of the Strait of Hormuz continue to tighten the supply outlook.
Peace negotiations failed in Pakistan in mid-April without an agreement, and the ceasefire in force since the beginning of April remains fragile. President Trump said Iran had called on the United States to lift its naval blockade while negotiations continued. Trump, writing on Truth Social, called on Iran to “get smart soon” and sign a deal, presenting the blockade as a lower-risk alternative to resuming airstrikes.
The Iranian economy would be under severe strain. The country reports 53.7% inflationa rial at its lowest and millions of job losses linked to the conflict. The Iranian rial collapsed to a record low of around 1.8 million (or 1.81 million) to the US dollar. Tehran has vowed to continue disrupting Hormuz traffic, saying it can use alternative routes.
Washington is stepping up pressure with potential sanctions targeting Chinese refiners and countries paying transit fees via Hormuz. The United Arab Emirates announced it would leave OPEC on May 1 to gain production flexibility, although analysts say the move will do little to ease the immediate supply crisis as Hormuz remains closed.
Prices have fluctuated sharply since the start of the conflict. Brent crude neared $120 a barrel at previous highs in 2026 before falling back on ceasefire hopes. The World Bank predicts that energy prices could rise by 24% overall this year if there are prolonged disruptions, which would be the largest expected rise since Russia’s invasion of Ukraine in 2022.
The average price of a gallon of regular gasoline reached $4.229, the highest since August 2, 2022. Fuel costs are heavily influenced by oil prices, which make up more than half the price at the pump. With refiners now opting for more expensive summer gasolines, increased pressure at the pump is expected as peak driving season approaches.
US stocks and bonds remain shaken
US stock markets fell slightly on April 29 as the oil rally added to existing uncertainty. The S&P 500 fell slightly by 0.20%, the Dow Jones Industrial Average by 0.27% and the Nasdaq by 0.41%. Hyperscalers Microsoft, Meta, Alphabet and Amazon, totaling about $11 trillion in market capitalization, were down 1-2% ahead of their earnings release after the bell, poised to update their artificial intelligence (AI) capital spending.
Visa rose more than 5% after reporting strong results for the latest quarter, while Booking fell 4% on its profits. Defensive stocks held up despite further oil gains. European markets also slowed, with the FTSE 100 down 0.73% and the pan-European Stoxx 600 down 0.4%.
The yield on the 10-year U.S. Treasury rose to 4.39%, reflecting inflationary concerns over rising energy costs. The Federal Reserve is widely expected to keep rates steady at its meeting today. Chairman Jerome Powell is likely to reiterate that policymakers remain data-dependent, with inflation risks elevated while growth remains stable. This will likely be Powell’s last meeting before his term ends in May.
The confluence of Big Tech profits, a Fed decision and a geopolitically driven oil shock left traders with little room for error. Markets remain fluid. Any progress in US-Iran negotiations or any agreement on reopening the strait could quickly reverse the upward trend in oil, as previous ceasefire announcements have shown. In the meantime, traders are closely watching energy supply data, Fed signals and geopolitical news reports.
