News of the week summary - 08/03/2026

The Strait of Hormuz closes: energy markets absorb a supply shock with no modern precedent

The formal closure of the Strait of Hormuz on March 4 was the pivotal event of the week. Iranian forces announced that commercial vessels would no longer be permitted to transit the narrow waterway, and the announcement was accompanied by boarding operations against ships attempting to proceed, the laying of sea mines in the passage, and attacks on tankers in the area. The UK Maritime Trade Operations Centre had reported ten attacks on vessels in the first week of the conflict, resulting in the deaths of five crew members on two ships. By the end of the week, tanker traffic through the strait, which had carried roughly 20 to 27 percent of the world's seaborne oil trade before the conflict, had fallen to near zero.

The immediate market reaction was a surge in Brent crude futures, which rose 28 percent across the week. From a pre-conflict level of around $72 per barrel, oil had reached $83 per barrel by March 5 as the closure became concrete, adding 15 percent in five trading days. Brent touched $100 per barrel for the first time in four years by the end of the week, crossing a threshold that analysts had flagged as the level at which energy costs would meaningfully accelerate consumer price inflation across the importing world. Gulf oil producers, whose export terminals are inside the Persian Gulf and accessible only through the strait, began curtailing production as storage filled and tankers could not depart. Kuwait, Iraq, Saudi Arabia, and the UAE collectively saw production fall by 6.7 million barrels per day by the close of the week, with the IEA estimating that the disruption ranked as the largest supply interruption in the history of the global oil market.

Equity markets absorbed the shock differently by geography. US large-cap stocks fell 2 percent on the week, a significant decline but a relatively contained one that reflected both the economy's partial insulation as an oil producer and investor confidence in corporate earnings that were still arriving in good shape. International markets bore the brunt. The MSCI EAFE index, covering developed markets outside the US and Japan, fell 6.7 percent on the week, its worst result in over a year. Emerging market equities declined 6.9 percent. Economies in Asia and Europe that import nearly all of their oil from the Middle East were more directly exposed to the loss of Hormuz supply, and their markets reflected that exposure immediately. The VIX, Wall Street's measure of expected equity market volatility, rose 28 percent to 26.40, still well below the 44.0 level reached during tariff turmoil in April 2025 but now in territory that indicated genuine institutional concern about the conflict's trajectory.

European natural gas prices surge toward winter crisis levels

While oil received most of the attention, the shock to global natural gas markets was in some respects more acute. European wholesale gas prices, as measured by the Dutch TTF benchmark, surged from around €30 per megawatt hour in the days before the conflict to €46 per megawatt hour on the Monday after it began, then pushed above €60 per megawatt hour during the week as the Hormuz closure became concrete. The move from €30 to above €60 in a matter of days was comparable in scale to the worst moments of the 2022 gas crisis triggered by the disruption of Russian pipeline supplies to Europe.

The mechanism was straightforward but the consequences were severe. Qatar, the world's second-largest LNG exporter, ships its gas through the Strait of Hormuz. With the strait closed, Qatari LNG tankers could not depart their terminals at Ras Laffan and Qatargas. European countries that had spent the preceding three years building import infrastructure for LNG as a replacement for Russian pipeline gas were confronted with a sudden shortfall precisely when their gas storage was at its lowest post-winter seasonal level. Storage across Europe had entered March at approximately 30 percent capacity, having been drawn down by a harsh winter, leaving limited buffer against supply interruptions. Household energy price forecasts across the UK, Germany and France were immediately revised upward. The European Commission began consultations on coordinated emergency measures.

The gas market development mattered beyond energy pricing because natural gas is a primary feedstock for fertiliser production. With spring planting season approaching in the Northern Hemisphere, analysts warned that higher gas prices and constrained supply could reduce fertiliser production, threatening crop yields for wheat, maize and rice later in the year. The conflict was beginning to transmit from the energy market into agricultural commodities through a channel that would not fully manifest for months.

February jobs report: a disappointing baseline for a deteriorating outlook

On Friday, the Bureau of Labor Statistics published the US employment situation for February, and it arrived against a backdrop of oil surging toward $100 and markets absorbing the initial shock of the conflict. The report showed a loss of 92,000 jobs in the month, well below the consensus forecast of a gain of 59,000 and a stark deterioration from January's 126,000 gain. Prior months were revised down by a combined 69,000, meaning the trajectory was weaker than it had appeared. The unemployment rate rose to 4.4 percent from 4.3 percent in January.

The composition of the loss was partly explainable. Healthcare lost 28,000 jobs in February, primarily reflecting strike activity among nursing staff; physicians' offices alone shed 37,400 positions during the reporting period, the largest such drop in recent years. Federal government employment fell a further 10,000 as the contraction that had been ongoing since the prior year's civil service reductions continued. Manufacturing lost 12,000 jobs; construction declined 11,000, partly reflecting winter storm disruptions; leisure and hospitality fell 27,000. Together, the losses added up to a three-month job creation average of around 6,000 per month and a six-month average scarcely above zero, a figure characteristic of a labour market that had reached something close to stagnation before the conflict began.

The February report was collected during the pay period that included March 12 of the prior calendar convention, meaning the data reflected employment conditions before the conflict began on February 28. What it established was a labour market that was already showing signs of fatigue independent of the energy shock: ongoing government employment contraction, normalised post-pandemic hiring across healthcare and hospitality, and a softening in manufacturing activity. Fed officials who had been waiting for the jobs data before forming their view on monetary policy now faced a compounded problem: a weakening labour market arriving simultaneously with an energy-driven inflation shock. Economists at JPMorgan described the result as "a tricky, stagflationary mix of risks" for the central bank to navigate.

February business activity surveys confirmed a strong pre-war baseline

Overshadowed by the conflict news, two surveys published at the start of the week had shown the US economy entering the conflict period from a position of genuine strength. The ISM Services Index for February registered 56.1 percent, published March 4, the highest reading since July 2022 and the twentieth consecutive month above the 50 percent threshold that marks the boundary between expansion and contraction. New orders, employment, and business activity components were all healthy. The ISM Manufacturing Index for February came in at 52.4 percent, published March 2, continuing a revival in factory output that had begun in late 2025 after an extended period of contraction.

The surveys described an economy that had been expanding solidly across most sectors when the conflict began. Services had been accelerating, manufacturing had been recovering, the housing market had been gradually reviving, and corporate earnings were arriving well ahead of expectations. These data points mattered not because they changed the outlook in the week they were released, but because they established the starting conditions from which the energy shock would be absorbed. An economy with strong momentum can sustain a supply shock better than one already close to recession. February's surveys were a record of that momentum, captured at the last possible moment before the world changed.