Hello, my name is Anique Bao from Singapore. Welcome to another edition of CNBC’s Daily Open.
The dominant issue remains the Strait of Hormuz, which is becoming more complex by the hour.
Oil prices fell below $100 per barrel on signs that diplomatic efforts to resolve the Middle East conflict continued despite the US initiating a blockade of Iranian ports.
Markets were spooked but rallied on signals that Tehran may still want talks, with investors calling the blockade a brinkmanship as hopes for a possible deal grew.
What you need to know today
The US Navy on Monday began a blockade of ships entering and exiting Iranian ports after peace talks in Islamabad ended without a deal over the weekend.
The Iranian government has used its partial control of the Strait of Hormuz to negotiate safe navigation agreements with several countries that depend on the flow of energy through the strategic waterway and the continued supply of oil to major buyer China.
“We can’t allow one country to blackmail and blackmail the world, because that’s what they’re doing,” President Trump said of Iran on Monday.
Asked whether the purpose of the obstruction was to force Iran to reopen the strait or to get it to the negotiating table, Trump said: “Certainly both and more.”
President Trump announced the closure of the Strait of Hormuz, but U.S. Central Command made clear that it would not prevent ships from entering or exiting ports other than Iran.
West Texas Intermediate fell 2.37% to $96.73 a barrel as of 8pm ET, while Brent crude fell 1.82% to $97.51 a barrel, rising during U.S. trading.
Meanwhile, U.S. stocks rose overnight, with the S&P 500 index up 1%, its highest since the war began in late February, after President Trump said he was hearing from the “right people” in Iran who still want a deal with the United States, suggesting diplomatic channels were not completely closed.
Asset management firm BlackRock raised its outlook for U.S. stocks on expectations that the impact of the war will be contained and strong corporate earnings will create a favorable backdrop for domestic stocks.
The coalition surrounding President Trump’s lockdown efforts appears to be in disarray. Britain has pushed back against Trump’s claims that Britain is joining the effort, saying it is working with France to build a “broad coalition” to protect freedom of navigation.
And lurking in the background: US intelligence assessments reportedly suggest China is willing to provide Iran with new air defense systems, which could complicate China-US relations.
China is scheduled to release import and export figures for March later on Tuesday, providing a glimpse into how the economy has fared in the shadow of the war.
And at the Fed, the clock is ticking uncomfortably. Federal Reserve Chairman candidate Kevin Warsh has submitted the necessary documents to the Senate, clearing a major hurdle to his confirmation hearing, according to people familiar with the matter.
But whether Mr. Warsh can achieve that goal by the end of Jerome Powell’s term on May 15 is another matter entirely.
— Anique Bao
And finally…
President Trump has blocked Iranian ports in the Persian Gulf. What does that mean?
A former senior Pentagon official from the Biden administration said the United States is trying to turn the tide on Iran. Iran has blocked the strait for weeks during the US-Israel war, disrupting global markets and creating bottlenecks that strain the economy.
Experts say the aim of the blockade is to persuade Iranian leaders to withdraw and acquiesce to U.S. demands to end the war and restore freedom of navigation in the strait.
“The government appears to be pursuing what’s called a tight blockade, an attempt to prevent ships from entering or leaving ports,” said Michael Horowitz, senior fellow for innovation at the Council on Foreign Relations and a former deputy assistant secretary of defense.
“The theory behind the strict blockade of Iran’s ports is to make it impossible for Iran to derive economic benefits from the sale of oil by sea in the strait, and to restrict other countries from doing so.”
— Garrett Downs
