Global markets ended the week under pressure as rising oil prices and escalating geopolitical tensions dampened investor sentiment. Concerns surrounding the Iran conflict and its potential disruption to global oil supply created ripple effects across equities, bonds, currencies, and commodities.

U.S. equities closed broadly lower. The S&P 500 fell 1.60% to 6,632.19, while the Nasdaq Composite declined 1.26% to 22,105.36. The Dow Jones Industrial Average led losses, dropping 1.99% to 46,558.47. The pullback reflects growing unease about inflation and the potential economic impact of sustained higher energy prices.

In fixed income markets, Treasury yields moved higher as investors recalibrated expectations for monetary policy. The two-year yield rose to 3.73%, while the benchmark 10-year climbed to 4.29%, and the 30-year reached 4.91%. Higher oil prices have reinforced concerns that inflation may remain persistent, likely keeping the Federal Reserve cautious and delaying anticipated rate cuts.

Currency markets saw a shift toward safety. The U.S. dollar strengthened, with the dollar index rising to 100.47. At the same time, the euro weakened to $1.142, and the dollar edged higher against the Japanese yen. This move reflects a broader flight to safe-haven assets amid geopolitical uncertainty.

Oil prices remained a central driver of market sentiment. Brent crude rose to US$102.93 per barrel, while West Texas Intermediate (WTI) climbed to US$98.16. The gains come as the Strait of Hormuz—one of the world’s most critical oil transit routes—remains constrained due to ongoing tensions. With roughly a fifth of global oil supply passing through this corridor, any disruption has significant global implications.

Despite the uncertain backdrop, gold prices declined. A stronger U.S. dollar and persistent inflation concerns weighed on the metal, with spot gold falling to US$5,018.07 per ounce. The decline suggests that investors are prioritising liquidity and yield-bearing assets over traditional hedges for now.

U.S. Economy: Resilient but Facing Headwinds

Recent economic data points to a mixed outlook for the U.S. economy. Consumer spending rose by 0.4% in January, signalling continued resilience despite higher prices. However, inflation remains a concern. Headline PCE inflation came in at 2.8% year-on-year, while core PCE rose to 3.1%—its highest level since March 2024.

At the same time, downward revisions to fourth-quarter GDP growth suggest that momentum may be slowing.

Oil, Geopolitics and Policy Uncertainty

The situation in the Middle East continues to shape global market dynamics. While tensions remain elevated, the U.S. has allowed limited Iranian oil shipments through the Strait of Hormuz to help maintain global supply. Even so, tanker traffic has declined sharply due to security concerns.

Oil prices have surged significantly since the conflict escalated, highlighting the market’s sensitivity to supply disruptions. Policymakers are now grappling with the inflationary impact of higher energy costs, which is complicating the global monetary policy outlook.

Central banks, including the Federal Reserve, are widely expected to keep interest rates on hold in the near term. However, there is increasing divergence among policymakers. Some favour a cautious, data-driven approach, while others are concerned that sustained energy-driven inflation could become more entrenched.

Trinidad and Tobago: Positive Developments in Energy

Amid global uncertainty, Trinidad and Tobago’s energy sector continues to show signs of strength. BP has awarded Noble Corporation a contract to drill three offshore wells, with operations expected to begin in 2027. The project reflects continued investment in offshore exploration and confidence in the region’s energy potential.

In the downstream sector, the National Gas Company (NGC) has signed a new gas supply agreement with Point Lisas Nitrogen Ltd. The deal is expected to support ammonia production, strengthen export capacity, and reinforce the long-term stability of the country’s petrochemical industry.

Corporate Developments: Innovation and Consolidation

In the corporate space, major companies continue to make strategic moves. Tesla is advancing its artificial intelligence ambitions with plans to launch a new chip manufacturing initiative. Micron Technology is expanding its footprint in Taiwan to meet growing demand for AI-driven memory solutions.

Meanwhile, Apple’s new low-cost MacBook Neo is drawing attention for improved repairability, signalling a shift toward more accessible and serviceable devices. In media, Warner Bros Discovery’s strong awards performance comes alongside continued scrutiny of its planned merger, reflecting broader consolidation trends in the industry.

Alphabet, through Google, is also facing increased regulatory pressure in Europe, underscoring ongoing tensions between Big Tech and global regulators.