US equities hit record highs as Iran oil risks intensify
The S&P 500 and the Nasdaq 100 closed at fresh record highs on Friday as renewed optimism around artificial intelligence (AI) helped overshadow concerns stemming from the Middle East conflict. For the week, the Nasdaq 100 gained 2.37%, the S&P 500 added 0.55%, while the Dow Jones fell 216 points, or 0.44%.
The weekend delivered a fresh twist. United States (US) President Trump abruptly cancelled the planned envoy trip to Pakistan for peace talks, citing unnecessary costs and a disappointing offer from Tehran. He then delivered a blunt message: ‘If they want to talk, they can come to us, or they can call us.’
This aggressive move puts the ball squarely back in Iran’s court, and the clock is now ticking loudly. Iran’s ageing onshore oil fields face a critical test, with storage facilities expected to hit maximum capacity this week. If forced shut‑ins follow, Tehran risks irreversible long‑term damage to its reservoirs and a serious hit to future production and revenue streams, as we highlighted in our previous update last week here.
In an interview on Fox News overnight, Trump drove the point home, warning that Iran is rapidly running out of time. He stated: ‘When you have lines of vast amounts of oil pouring through your system … what happens is that line explodes from within, both mechanically and in the earth … They say they only have about three days left before that happens.’
This realisation appears to have driven a fresh set of headlines this morning that Iran has offered to prioritise opening the Strait of Hormuz and ending the naval blockade before discussing nuclear negotiations. While this is certainly a positive development, and one that saw US equity futures rebound from early losses this morning, it is hard to see the US accepting anything less than a comprehensive deal that both opens the Strait of Hormuz and addresses Iran’s nuclear weapons program.
Earnings season and Fed meeting take centre stage
Looking ahead beyond the Middle East drama, this week is the busiest of the first‑quarter (Q1) earnings season, with big technology names, including Apple, Microsoft, Amazon, Alphabet and Meta, all due to report. At this juncture, roughly 81% of S&P 500 companies have beaten earnings estimates and 79% have topped revenue forecasts, both well above long‑term averages.
On the economic front, all eyes will be on Thursday’s Federal Open Market Committee (FOMC) meeting. The Federal Reserve (Fed) is widely expected to keep interest rates on hold as it digests the energy shock, with markets already looking ahead to Kevin Warsh taking over as chair in June.