Global markets faced heightened volatility as tensions between the United States and Iran over the Strait of Hormuz continued to drive uncertainty. The US Dollar Index (DXY) fell toward the 100.00 area, pressured by hopes for a ceasefire framework and President Donald Trump’s ultimatum regarding the reopening of the Strait, which undermined the Greenback’s haven appeal despite elevated oil prices and a cautious Federal Reserve outlook [1]. The DXY was down 0.19% at one point, though it later trimmed losses to trade back above the 100.00 handle [3].
WTI Crude Oil experienced sharp divergence between spot and futures markets. May futures spiked to about $115 before settling near $112, while spot prices slipped 0.2% to settle near $104 after a session high of $106 and a low of $101 [2]. The gap between spot and futures reflects extreme backwardation, with traders pricing a significant near-term delivery premium tied to Trump’s Tuesday deadline for Iran to reopen the Strait. The Energy Information Administration reported a 5.5 million barrel rise in US crude inventories for the week ending March 27, and OPEC+ approved a 206,000 barrels-per-day output hike for April, but these bearish factors were outweighed by geopolitical risk, which Goldman Sachs estimates adds $14–$18 per barrel to prices [2].
President Trump issued a threat on social media, warning that if Iran does not reopen the Strait by 8 pm Eastern Time on Tuesday, he would take military action, stating, “I am blowing up everything” [2][3]. Iran rejected the ultimatum, with officials stating negotiations cannot proceed under threats and that the Strait would only reopen after reparations for war damage are paid [2][3]. A Pakistan-brokered 45-day ceasefire proposal was rejected by Iran, and mediators from Pakistan, Egypt, and Turkey were less optimistic about a deal before the deadline [2][3].
Gold prices, after hitting a daily high of $4,706, retreated to $4,652 as doubts over an Iran deal and military preparations by the US pressured the metal [3]. The ISM Services PMI in the US slowed to 54 in March from 56.1, missing expectations, while the prices paid sub-component surged to 70.7, the highest since October 2022, due to higher energy costs [1][3]. US Nonfarm Payrolls added 178,000 jobs, beating estimates, and the unemployment rate edged down to 4.3% [3]. Money markets now expect the Federal Reserve to keep rates steady throughout the year [3].
Contradicting the dominant narrative of a fully closed Strait, Citrini Research reported that vessels are still moving through the Strait of Hormuz, with traffic picking up to about 15 ships per day, though this remains well below normal levels [4]. The firm’s analyst, after a field trip to the region, found that Iran is selectively allowing ships to pass, creating a “functional checkpoint” rather than a total blockade. Many tankers are reportedly transiting with AIS transponders off, making official data unreliable [4]. Citrini expects a prolonged disruption that embeds a lasting risk premium into oil markets [4].
CONCLUSION
Markets remain highly sensitive to developments in the US-Iran standoff, with oil prices volatile and the US Dollar under pressure amid conflicting reports about the Strait of Hormuz’s status. While official narratives suggest a near-total closure, on-the-ground observations indicate partial and selective shipping activity. The ongoing uncertainty is likely to sustain elevated risk premiums in energy markets and keep investors on edge.