Traders in Seoul entered a market that had already reached a decision early on April 2. For a brief moment, the Korea Composite Stock Price Index appeared to be on the rise, rising by almost 2%. However, it quickly reversed course and ended the day down 4.2%. The Singaporean exchange began trading at a two-week high before declining. The Hang Seng dropped 1.1% in Hong Kong. The same pattern emerged throughout the area: a brief period of cautious optimism followed by the real numbers taking control. The reason was President Donald Trump’s 19-minute speech the previous evening from the White House’s Cross Hall, where he stood in front of long-exposure lighting and assured the American people that American forces would complete the task in Iran and would “hit them extremely hard over the next two to three weeks.”
The energy markets immediately and severely suffered as a result. West Texas Intermediate, the price of US crude oil, increased 11.3% to $111.54 per barrel at one point, briefly reaching $114 before declining. The global benchmark, Brent crude, increased 7.8% to $109.03 per barrel. In the days prior to Trump’s speech, both had been moving back toward $100 due to rumors of diplomatic back channels and the potential for a negotiated opening of the Strait of Hormuz. All of that was erased by the speech in about the same amount of time as preparing dinner. Presidential resolve can be priced almost instantly by oil prices, and on Wednesday night, they priced more war.
| Oil Markets & Middle East Conflict — Key Data | |
|---|---|
| Conflict | U.S.–Iran War, began late February 2026 |
| Trump’s Address | April 1, 2026 — primetime speech from White House Cross Hall |
| U.S. Crude (WTI) Price Post-Speech | $111.54/barrel, up 11.3% in a single session |
| Brent Crude Price Post-Speech | $109.03/barrel, up 7.8% |
| U.S. Average Gas Price | $4.08/gallon — first time above $4 since 2022 |
| Strait of Hormuz Status | Largely blocked; daily traffic fell to under 10% of historical average |
| South Korea KOSPI Drop | Down 4.2% in early post-speech trading |
| MSCI EM Asia Index Drop | Down 2.3% |
| S&P 500 Weekly Performance | Rose 3.4% for week — first weekly gain since war began |
| Federal Reserve Rate Outlook | Rate cuts effectively ruled out for 2026 amid inflation surge |
| USS Gerald R. Ford Status | Returned to sea after fire repairs; 11th month of deployment |
| Key Diplomatic Development | UN Security Council vote on Bahraini Strait proposal; U.S.–Iran talks set for Islamabad |
| Further Reference | EIA World Oil Transit Chokepoints |
It is difficult to adequately describe the Strait of Hormuz as the physical epicenter of this crisis from a distance. During normal times, about a fifth of the world’s traded oil and liquefied natural gas pass through that narrow waterway between Iran and Oman, which is only 21 miles wide at its narrowest point. Supertankers traveling in leisurely convoys toward Asia used to share it with fishing boats and cargo ships. Currently, daily shipping traffic is less than 10% of what it was in the past. Supertankers are seen waiting in anchorages outside the strait in satellite photos. In March alone, Saudi Arabia rerouted about a million barrels per day away from the channel. This massive logistical rerouting adds days to delivery schedules and raises the cost of each barrel. Eventually, that expense ends up in every gas station, freight bill, and airline ticket.
Early in April, the national average price per gallon surpassed $4.08, marking the first time since Russia’s invasion of Ukraine in 2022 that American drivers noticed the change at the pump. There is more to the parallel than meets the eye. Both incidents caused significant disruptions to the world’s energy supply chains, sent inflation expectations skyrocketing, and put the Federal Reserve in an awkward position. As the Fed tried to control a weakening labor market, traders had been factoring in multiple interest rate reductions going into 2026. Most of those wagers are now off the table. Early April inflation data revealed that consumer prices in the United States were rising at their fastest rate in almost four years, mostly due to energy expenses. Wall Street is aware that the Fed will not lower rates in the event of a supply-shock inflation spiral.
The exposure is especially severe for Southeast Asia. The majority of Southeast Asian economies are net importers, in contrast to the United States, which produces more oil than Saudi Arabia and Russia put together. Their budgets were directly impacted by rising crude prices, which simultaneously increased the cost of food, transportation, and industrial inputs. Following Trump’s speech, South Korean President Lee Jae-myung moved swiftly, asking parliament to approve a supplemental budget of 26.2 trillion won, or about $17.3 billion, to mitigate what his government described as the greatest threat to the nation’s energy security. The benchmark indexes for Indonesia and Malaysia fell. As jet fuel prices increased to the point where certain schedules were just not feasible, airlines throughout the region started raising ticket prices and reducing their routes.
This market moment has a quality that feels genuinely distinct from the typical volatility of geopolitics. When a conflict intensifies, there is typically a brief shock followed by a gradual repricing as traders assess probability scenarios and adjust their hedging. This seems more flexible. The deadline pattern that has emerged around the Strait of Hormuz contributes to its unsettling nature. Trump set a deadline, extended it, set another, and then made no mention of it at all in his primetime speech on April 1. He talked for 19 minutes about the strength of the United States, domestic oil production, and the upcoming accomplishment of military goals, but he did not provide any specific plan for reopening the most important oil transit route in the world. Investors who were hoping for a road map were given a catchphrase. Markets are aware of the distinction.
Whether the diplomatic route has any genuine momentum is still up for debate. According to reports, U.S. envoys Jared Kushner and Steve Witkoff have been working behind closed doors, and negotiations were ultimately set for the following weekend in Islamabad. Arriving in Pakistan, the Speaker of Iran’s Parliament appeared to be at least somewhat open to negotiating. However, Iran’s missile launches toward Israel continued unabated after the speech, with a third launch intercepted in northern Israel less than half an hour after Trump concluded his remarks. Iran has also publicly rejected American claims of negotiations as fabrications. That is not how a party on the verge of surrender behaves.
Driven by optimism that ceasefire negotiations might result in something long-lasting, the S&P 500 ended the week with a 3.4% gain, its first positive week since the start of the conflict. Traders have learned to handle each de-escalation signal cautiously because the market’s optimism is brittle and conditional. Observing all of this, it is evident that the world economy has been put in an uncomfortable holding pattern, sustained by a conflict whose timeline is constantly changing and a strait that is largely closed every day.
