World Economic Highlights for the Week of March 29–April 4, 2026: Iran conflict remains hot as Trump unveils new tariff measures

Oil prices continued to rise this week, up about 11% amid concerns that the US–Iran conflict could prolong shipments through the Hormuz Strait and extend the war. WTI futures settled at $111.54 per barrel in New York, the highest close for the benchmark since June 28, 2022.

Prices briefly dipped when President Trump began a nationwide address on April 1, but rebounded quickly as markets reassessed that the fighting had not cooled. In the address, Trump said the American and Israeli military campaign in Iran was nearing completion but could last another 2–3 weeks, and warned Washington would strike harder if no agreement is reached. He urged allies to reopen the Hormuz Strait.

Hormuz shipping disruption and security response

Iran is establishing a control mechanism at the Hormuz Strait, requiring ships to pass a route near Larak Island and undergo screening and clearance by the Islamic Revolutionary Guard Corps (IRGC). Some vessels are reported to have paid transit fees, with vessels tied to Iran, China, India, or other countries Tehran considers friendly appearing to be prioritized. This week, a Malaysian oil tanker was allowed to pass through Hormuz without fees.

More than 40 countries formed a multinational security alliance for Hormuz. After an online meeting chaired by the UK on Thursday, April 2, more than 40 countries agreed to launch a multinational alliance to restore freedom of navigation through Hormuz after the fighting subsides. The meeting was consultative at this stage, and no deployment decisions have been made.

Broader energy infrastructure attacks

As the conflict enters its second month, additional key energy facilities have been attacked, including Kuwait’s Mina al-Ahmadi refinery and Abu Dhabi’s Habshan gas facility. The latest incidents suggest targets are broadening beyond oil and gas to electricity, steel, and desalination plants.

US policy and macro data: tariffs, jobs, housing, and fuel

On April 2, Trump announced two major tariff changes, including up to 100% tariffs on some imported specialty drugs and adjustments to the tariff regime for steel, aluminum, and copper. The move comes as the government unwinds offset tariffs collected after the policy was struck down by the Supreme Court. It is estimated that every day of delay in refunding these duties costs the government $23 million in interest.

In the US, Labor Department data reported that the labor market recovered in March. The broader picture shows job growth slowing, a shrinking labor force, soft wage gains, and fewer hours worked. The data reinforce expectations that the Federal Reserve will wait rather than cut rates soon, citing still-high inflation and higher energy prices tied to the US–Iran conflict.

Mortgage rates continued to rise. The 30-year fixed mortgage rate rose to 6.46%, the highest in seven months, as Treasuries yields climbed and markets priced in a longer period of higher rates, making housing more expensive during the spring selling season.

Gasoline prices in the US rose above $4 per gallon for the first time since August 2022. The report cited steps to ease price pressures, including expanding E15 sales, releasing oil from the Strategic Petroleum Reserve, and suspending the Jones Act. However, the oil-price momentum from Iran and continued disruption of energy flows through Hormuz mean the measures are not yet clearly effective.

Europe and Asia: inflation, energy planning, and Russian crude

In the euro area, inflation accelerated in March, largely due to energy costs, raising questions about whether the European Central Bank will need to raise rates soon.

The European Commission urged member states to prepare for a potential extended disruption to energy supplies. The focus includes reducing oil and gas consumption, especially in transport, while seeking alternative supplies and ensuring refinery operations stay on track.

Many Asian countries resumed or increased purchases of Russian oil following energy shocks from the Gulf and with US sanctions easing. Buyers and importers mentioned include China, India, the Philippines, South Korea, Sri Lanka, Thailand, and Indonesia.

Energy supply shifts and market moves

Germany’s Economy Minister Katarina Reiche urged Berlin to reconsider its stance against nuclear power, arguing that closing nuclear plants has left Germany increasingly dependent on gas and vulnerable to energy shocks. The remarks came as European gas prices rose amid the Iran conflict, with German electricity prices still far higher than in France.

In the US, the Golden Pass LNG facility—an ExxonMobil and QatarEnergy joint venture—began operating the first of three units and is expected to ship its first cargo in Q2 2026. When all three units are online, Golden Pass could reach capacity of 18 million tonnes per year.

Chinese government bonds gained as a safe haven amid the Iran conflict, while US, UK, and European bonds saw yields rise amid inflation fears and energy-price-driven pressures.

Meanwhile, US and European government bonds sold off. Foreign central banks have been selling US Treasuries, pushing holdings at the New York Fed to the lowest since 2012. European government bonds also sold off as the Iran–US conflict pushed energy prices higher, stoking inflation fears, with yields on German, French, and UK bonds climbing to multi-year highs.

Growth outlook and airline impacts

Germany’s spring forecast from five leading institutes trimmed the outlook for 2026 GDP growth to 0.6%, down from 1.3% previously, mainly due to energy-price shocks from the Iran conflict.

China’s economy showed signs of recovery in March, with manufacturing and services activity returning to growth. PMI manufacturing rose to 50.4 and PMI services reached 50.1, indicating improvement after the Lunar New Year.

Jet-fuel prices surged as the Iran conflict forced airlines to adopt emergency measures. Global capacity growth for April was nearly wiped out, with growth revised from 5.4% to 0.2%. Airlines in Asia and Europe have cut flights, adjusted schedules, raised fares, or added fuel surcharges.

Industrial commodities: aluminum

Global aluminum prices rose sharply to a four-year high after Iran attacked two large Gulf producers, Emirates Global Aluminium and Aluminium Bahrain, raising concerns about potential global supply shortages.

US defense spending proposal

Trump proposed boosting the US defense budget by $500 billion in fiscal 2027, taking total national defense spending to $1.5 trillion, while cutting 10% of non-defense spending. The plan prioritizes warfare, shipbuilding, missile-defense, strategic minerals, and higher pay for service members as the US continues the Iran operation.

Corporate development: SpaceX IPO filing

SpaceX filed for an IPO and targets a valuation above $2 trillion, potentially one of the largest listings in history. Bloomberg reports the IPO could occur in June and raise up to $75 billion.