Iran Defense Committee, Latest Statement! Concerns the Strait of Hormuz! Britain Suddenly in Crisis!

There is more news coming from the Strait of Hormuz!

After the A-shares market closed, Iran’s Defense Council issued a new statement saying that non-belligerent countries can only pass through the Strait of Hormuz with Iran’s coordination. If Iran’s coast or islands are attacked, Iran will cut off the Gulf shipping lanes and communication lines, and will lay explosive mines at sea, including from the Iranian coast.

Meanwhile, with oil prices soaring, global capital markets are in turmoil. The war in the Middle East has led to rising energy prices and yields, and UK government bonds are facing their worst month since the crisis that led to former Prime Minister Truss’s resignation. At that time, UK pensions nearly went bankrupt.

So, how will oil prices evolve? Has the market fully reflected the Middle East conflict?

Iran’s Defense Council Speaks Out

Today around 3:50 PM, Iran’s Defense Council issued a statement saying that non-belligerent countries can only pass through the Strait of Hormuz with Iran’s coordination. Iran is committed to “reciprocal retaliation” and will also respond “immediately and destructively” to attacks on power plants and energy infrastructure. If Iran’s coast or islands are attacked, Iran will cut off the Gulf shipping lanes and communication lines, and will lay explosive mines at sea, including from the Iranian coast.

On the evening of March 21, U.S. President Trump posted on social media, issuing a “48-hour” final ultimatum to Iran, demanding that the Strait of Hormuz be reopened for “full, threat-free” passage within the deadline, or the United States would strike Iranian power facilities.

Bessent, in an interview with NBC on March 22, said that sometimes it is necessary to escalate actions first in order to de-escalate, and that this is the only language Iran understands.

Bessent stated that the U.S. aims to destroy Iran’s defenses along the Strait of Hormuz. He said Trump would take all necessary measures to destroy Iran’s air force and navy, deprive Iran of its nuclear capabilities, and project power internationally.

European Crisis

The war in the Middle East has caused energy prices and yields to rise, with UK government bonds facing their worst month since the crisis that led to former Prime Minister Truss’s resignation.

An index tracking the performance of traditional UK government bonds fell nearly 5% this month, the largest decline since an 8% drop in September 2022. This sell-off has reduced the market value of the benchmark index by £108 billion, bringing it to £1.63 trillion as of last Friday’s close (March 20). For UK bond investors, this is a significant shift.

The benchmark index achieved a 5% return in 2025—its best performance since 2020. Since the U.S. attacked Iran, the global bond market has suffered, with UK bonds performing the worst. The UK’s reliance on imported energy makes it particularly vulnerable to supply disruptions.

European stocks opened Monday with the Stoxx Europe 600 down 1.28%, the UK FTSE 100 down 1.44%, France’s CAC 40 down 1.48%, and Spain’s IBEX down 1.86%. Market expectations for ECB rate hikes have increased, with pricing indicating a 50% chance of four rate hikes by 2026, and the likelihood of further hikes rising. The market has fully priced in the expectation that the Bank of England will raise rates four times by 2026, each by 25 basis points.

Oil Prices Continue to Rise

Today, Goldman Sachs’ oil team stated that the unprecedented scale of this oil supply shock is likely to prompt a reassessment of energy risks. “We expect that after the Strait of Hormuz reopens, policymakers will rebuild higher strategic reserves, and the market will incorporate a safety premium into long-term prices.”

Goldman Sachs noted that the impact has not yet fully spread to Western regions, mainly representing a regional crisis with a significant decline in oil transportation and tight supply in Asian markets (which typically account for 95% of Hormuz imports). However, commercial crude oil inventories in the U.S. and OECD countries are rising.

Goldman Sachs currently forecasts Brent crude averaging $110 per barrel from March to April, 62% higher than the 2025 average. It predicts WTI will average $98 per barrel in March and $105 in April, as the market will consider U.S. export prices, widening the spread between WTI and Brent.

Additionally, Goldman Sachs’ latest macro flagship report, Top of Mind, states that global asset prices currently only fully reflect the “inflation shock,” but completely ignore the destructive impact of high energy costs on global economic growth. The report warns that once market expectations of a “short-term war end” are proven false, a “growth recession” will become the second shoe to drop, potentially triggering a sharp reversal in global asset prices.

Given the long-term crisis risk, Goldman Sachs has sharply downgraded its 2024 growth forecasts for major economies like the U.S. and Eurozone, raised inflation outlooks, and delayed the next Fed rate cut from June to September.

Analysts at DBS Group Research stated in a report that if the conflict persists longer, oil prices could remain above $100 per barrel for an extended period, possibly rising to $150 or higher in the next two quarters. The volatility in oil prices makes it difficult to evaluate stock values based on a $90–$100 per barrel oil price.