Deutsche Bank strategists highlight a sharp jump in Oil prices driven by escalating tensions between the US and Iran and renewed rhetoric from President Trump on the Strait of Hormuz. Brent surged with its biggest daily rise since 2020, reviving stagflation concerns and pushing rate expectations and global bond yields higher, while equity markets struggled as energy costs and geopolitical risks weighed on sentiment.

Brent spike revives stagflation worries

"Ahead of this and all the overnight moves, the big story yesterday was the latest jump in oil prices, which revived fears around stagflation, and hit bonds and equities on both sides of the Atlantic."

"That followed further strikes between the US and Iran over the weekend, which meant Brent crude (+9.59%) saw its sharpest rise since March 2020, reaching a 4-week high of $83.30/bbl by the close."

"It came back with a figure of around $400-500m a day based on $2-2.5bn of daily cargo passing through the Strait."

"President Trump has a habit of starting with an extreme negotiating position so no doubt this would come down if it was ever implemented, but the very spectre of tolls will make markets and customers nervous."

"US Central Command said that it will resume the Iran blockade at 4pm NY time today, so that still leaves a bit of time for a possible climbdown."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)