In a much-needed breather, oil prices tumbled over 5% on Wednesday amid growing hopes of a ceasefire that could ease supply disruptions from the Middle East, a key oil-producing region. The decline followed reports that the U.S. had sent Iran a 15-point proposal aimed at ending the ongoing conflict.

U.S. President Donald Trump said Washington and Tehran are “currently in negotiations” and suggested that Iran is eager to strike a peace deal, even as the Islamic Republic has denied holding any direct talks with the United States.

Crude oil price on March 25

Brent crude futures dropped $6.21, or 5.9%, to $98.28 a barrel by 0058 GMT, after touching a low of $97.57. U.S. West Texas Intermediate crude futures fell $4.67, or 5.1%, to $87.68 a barrel, having slipped earlier to $86.72. This came after both benchmarks had gained nearly 5% on Tuesday, before giving up some of those gains in volatile post-settlement trade.Market participants appear to be reacting to slightly improved expectations of a ceasefire, prompting some profit booking. But uncertainty around the success of negotiations is likely preventing a sharper bout of profit taking.

According to Israel’s Channel 2, the proposal US sent includes a one-month ceasefire to allow discussions, along with provisions for dismantling Iran’s nuclear programme, ending support for proxy groups, and reopening the Strait of Hormuz.
On the diplomatic front, Pakistan’s prime minister on Tuesday offered to host talks between the U.S. and Iran. However, Iran had denied on Monday that it was engaged in any negotiations with the U.S.
Despite these developments, military activity has continued, with strikes by the U.S., Israel, and Iran ongoing. Sources also indicated that Washington is preparing to deploy additional troops to the region.
Despite the possible relief, concerns around the Strait of Hormuz persist. The ongoing conflict has effectively disrupted shipments of nearly one-fifth of global oil and liquefied natural gas passing through the key waterway.

International brokerage Macquarie has said that even if tensions ease in the near term, oil prices are likely to find support in the $85–$90 range, with a gradual move back toward $110 until normal flows through the Strait of Hormuz resume. The note added that if disruptions persist through April, Brent could still climb to $150 per barrel.

Looking ahead, crude prices could move higher from current levels. According to Kayanat Chainwala of Kotak Securities, oil may rise to $120 per barrel in the near term and potentially touch $150 if the conflict continues

Nuvama Institutional Equities echoes the same view. The continued closure of the Strait of Hormuz, which handles around 20 million barrels per day, could push crude prices to the $110–150 per barrel range.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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The maker of Activia yogurt and Evian water said Monday that the deal would bolster its presence in the so-called “complete nutrition” sector and help Huel expand internationally.

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The global artificial intelligence boom is facing a significant threat due to its heavy reliance on energy and chemical imports from the Middle East, which are now jeopardized by the conflict involving Iran.

The high-tech supply chain—from semiconductor manufacturing in East Asia to data center operations in the United States—is vulnerable to disruptions in the Strait of Hormuz and damage to regional infrastructure. Ultimately, a prolonged conflict could lead to soaring chip prices, a halt in production, and a collapse of current tech valuations, potentially triggering a global recession.

Key Points

• Energy Dependency: Major semiconductor hubs in South Korea and Taiwan are almost entirely dependent on fossil fuel imports from the Middle East, particularly liquefied natural gas (LNG) passing through the Strait of Hormuz.
• Critical Chemical Supply: The region is a primary source for essential chip-making materials, including one-third of the world’s high-purity helium from Qatar, seaborne sulphur for etching, and bromine from the Dead Sea.
• Data Center Costs: Rising global LNG prices are driving up electricity costs in the U.S., where energy represents approximately 50% of operating expenses for the data centers powering AI.
• Logistics and Shipping: The conflict has created bottlenecks in air and sea freight, specifically impacting regional hubs like Dubai and delaying the delivery of wafers and finished chips.
• Infrastructure Damage: Recent attacks on Qatar’s Ras Laffan plant, the world’s largest LNG and helium facility, mean that even an immediate end to hostilities would require months to restore the supply chain to pre-crisis levels.
• Financial Risk: Investors are beginning to price in higher inflation, rising interest rates, and the potential unwinding of high tech valuations and debt borrowed against AI assets.

Analysts warn that if the Strait of Hormuz remains closed for more than a month, the resulting supply chain break could become irreparable in the short term, leading to a worldwide economic downturn.

As the global economy increasingly anchors its future growth on Artificial Intelligence, a shadow of geopolitical risk looms over the horizon. While the “AI Boom” has been driven by unprecedented leaps in LLM (Large Language Model) capabilities and semiconductor demand, analysts are beginning to sound the alarm on how escalating tensions in the Middle East—specifically involving Iran—could introduce a level of volatility that the tech sector is ill-prepared to handle.

Asia, receiving 80-82% of Qatar’s exports, faces acute pressure, with LNG spot prices up 39-50% and rerouting adding costs and delays. South Korea and Taiwan’s chip fabs, heavily reliant on Middle East LNG for electricity (e.g., Taiwan’s 40% LNG mix), risk production halts as power costs soar.

For the business community in Thailand, which is currently positioning itself as a regional hub for data centers and digital transformation, these global shifts are more than distant concerns; they are critical variables in local strategic planning.

The Energy Nexus: Powering the AI Engine

The AI revolution is uniquely energy-intensive. From the massive cooling requirements of data centers to the electricity consumed during model training, the industry’s overhead is deeply tied to global energy prices.

Any conflict involving Iran threatens the stability of the Strait of Hormuz, a transit point for one-fifth of the world’s total oil consumption. A spike in energy costs would lead to a direct increase in operational expenses for cloud providers like Amazon Web Services, Google, and Microsoft. For Thailand, where energy price fluctuations directly impact the cost of doing business, an “AI tax” driven by high energy prices could slow the adoption of these technologies across the manufacturing and service sectors.

Supply Chain Fragility and the Semiconductor Bottleneck

The AI boom is currently built on a “just-in-time” supply chain for high-end semiconductors. While the majority of chip fabrication occurs in East Asia, the logistics of global trade are highly interconnected.

Geopolitical instability often leads to a “risk-off” sentiment in global markets, causing shifts in shipping routes, increased insurance premiums for freight, and potential shortages in raw materials. “In a world of integrated trade, a localized conflict in the Middle East does not stay local,” says a senior analyst in Bangkok. “The volatility it introduces into the global supply chain can delay the rollout of the hardware necessary to sustain AI scaling.”

Market Volatility and Capital Flow

The current AI surge is fueled by massive capital expenditures. However, high-growth sectors are historically the most sensitive to geopolitical shocks. Should a conflict in Iran escalate, the resulting market volatility would likely trigger a flight to “safe-haven” assets.

For the Thai SET (Stock Exchange of Thailand) and regional tech startups, this could mean a tightening of venture capital and a reduction in Foreign Direct Investment (FDI). As investors pivot toward risk mitigation, the aggressive funding rounds that have characterized the AI sector over the last 24 months could see a significant cooling period.

The Thai Perspective: Resilience in Uncertainty

For Thai business leaders, the potential for a “Silicon Shock” underscores the need for resilience. As the government pushes the “Thailand 4.0” initiative, diversifying energy sources for digital infrastructure and localizing AI applications may become necessary hedges against global instability.

While the AI boom has the momentum of a decade-defining trend, it is not immune to the realities of global politics. The coming months will determine whether the tech sector can navigate this period of heightened geopolitical risk, or if the “AI Spring” will face an unexpected winter driven by regional conflict.

Other People are Reading

Wall Street indexes fell in Tuesday’s volatile session as investors swayed between fears of rising oil prices and hopes for a resolution to the U.S.-Israeli war on Iran as U.S. President Trump claimed there were talks even as reports suggested that more American troops were headed to the Middle East.

U.S. Treasury yields extended gains after a weak auction of 2-year Treasury notes, also adding pressure to equity markets.

Indexes regained some ground after Trump ‌told reporters that the ⁠United States ⁠was talking to “the right people” in Iran in order to reach an agreement to end hostilities and that Iran has agreed they will never have nuclear weapons. But reports the Pentagon would send thousands of more troops from the elite 82nd Airborne Division to the Middle East caused some concerns.

Wall Street indexes on Monday had marked their biggest one-day gain since February 6 ]as oil prices fell after Trump had postponed strikes against Iranian power plants and announced talks with Iran even as Tehran denied negotiations with the U.S. But energy prices rose on Tuesday with crude oil futures settling up more than 4%.

“Stocks are trying to find their footing as investors are keeping one eye on social media and the other eye on every headline. We’re very short-term oriented,” ⁠said Carol Schleif, chief ‌market strategist, BMO Private Wealth.

“Markets are trying to hold onto the optimism they had yesterday. They’re so ready to move beyond war talk even if it’s not 100% settled,” said Schleif but she added, “There’s a lot of nervousness. People are watching oil and ⁠watching interest rates and worrying do we go higher for longer on both energy and interest rates because that could start negatively impacting growth.”
Kevin Gordon, head of macro research & strategy at the Schwab Center for Financial Research in New York also pointed to a “double whammy” higher oil prices and higher rates as a “stagflationary backdrop, which, needless to say, is not a positive backdrop for the stock market.” According to preliminary data, the S&P 500 lost 24.62 points, or 0.36%, to end at 6,557.19 points, while the Nasdaq Composite lost 184.86 points, or 0.84%, to 21,762.77. The Dow Jones Industrial Average fell 87.24 points, or 0.19%, to 46,121.23.

Among the 11 S&P 500 major industry sectors, energy led gains during the session while communication services and technology were leading losses.

Meanwhile, private credit concerns resurfaced after a report that Ares Management limited ‌redemptions at 5% at its private credit fund, along with Apollo Global Management , as withdrawal requests surged.

Earlier a survey showed U.S. business activity slowed to an 11-month low in March as the Middle East war raised prices for energy products and other inputs.

Higher oil prices have revived inflation jitters and complicated the interest ⁠rate outlook for central banks. The U.S. Federal Reserve struck a hawkish tone last week, projecting only one reduction in 2026.

Traders are no longer pricing in any rate cuts this year, compared with two reductions expected before the Middle East conflict erupted. Expectations for hikes nudged higher amid escalating tensions last week, but were quickly unwound after Trump’s comments on Monday, according to CME’s FedWatch Tool. Among individual movers, shares of Jefferies rose after the Financial Times reported that Japan’s Sumitomo Mitsui Financial Group is working on plans for a possible takeover of the investment bank. Shares in cosmetics maker Estee Lauder tumbled after it said it was in talks for a potential merger with Spanish beauty group Puig Brands. Barclays lifted its 2026 year-end target for the S&P 500 index to 7,650 from 7,400, citing stronger earnings expectations that outweigh macro risks like Middle East tensions, AI-driven disruption and stress in private credit.

Mumbai: Indian equities on Tuesday expectedly tracked a pan-Asian rebound in risk assets to climb nearly 2% while the rupee gained against the dollar, as traders slashed bearish bets after the US halted strikes on Iran in first apparent signs Washington was finally giving diplomacy a chance to help resolve the Gulf crisis.

Still, the conspicuous absence of reciprocal conciliatory statements from Tehran and reports of Iranian attacks tempered optimism on Dalal Street, said analysts, who don’t expect volatility to subside just yet.

The NSE Nifty climbed 1.8% to 22,912.40, while the Sensex advanced 1.9% to 74,068.45. Both gauges have slumped nearly 9% since the start of the war. The rupee, meanwhile, settled at 93.86/$, up 11 paise from its previous close, LSEG data showed. It surged to an intraday high of 92.63/$ and traded in a wide range of 128 paise amid mild central bank interventions, traders said.

“The markets were oversold and news of a halt in attacks from the US triggered some short covering that led the rally,” said Rajesh Palviya, head of technical and derivatives, Axis Securities. “However, it doesn’t indicate volatility is over since there hasn’t been a concrete resolution yet.”

Strait Still Closed

Asian risk assets, which took a cue from the overnight advance in US equities, climbed Tuesday. Hong Kong jumped 2.8% while South Korea gained 2.7%. China and Japan climbed 1.8% and 1.4%, respectively. Taiwan, however, declined 0.3%.
Palviya said not all the short positions are out of the system as investors await clarity on conflict resolution. Brent crude oil futures retreated about 10% on Monday but retraced to $98.9 on Tuesday after Iran denied talks with the US and launched fresh attacks.
Analysts said the continued closure of the crucial waterway that evacuates a fourth of the world’s energy output capped outsized gains for Indian equities. “If there is further de-escalation from this point, then this could be a bottom for the market,” said Dharmesh Kant, head of research, Cholamandalam Securities.
Energy supplies and the price of crude oil remain key monitorables in the rate and currency markets, too, analysts said. The rupee’s near-term trajectory is linked to geopolitics and Tuesday’s advancing trend could quickly reverse if hostilities continue.

“Some pullback in crude oil prices and easing geopolitical tone supported the rupee, and risk sentiments improved slightly. However, persistent equity outflows from foreign funds continue to pressure the rupee, and I expect a range between 93.65 and 94.25 on Wednesday,” said Anil Bhansali, head of treasury at Finrex Treasury Advisors.

U.S. efforts to resolve tensions with Iran through diplomacy face deep skepticism from military leadership, even as negotiations unfold behind the scenes.

Retired Gen. Jack Keane, a Fox News strategic analyst, joined FOX Business’ Maria Bartiromo on “Mornings with Maria” to discuss whether diplomacy can achieve the same objectives as military action, including reopening the Strait of Hormuz and dismantling Iran’s nuclear and missile capabilities.

Keane said the administration is attempting to use diplomatic leverage to reach outcomes that could otherwise be achieved through force but warned the challenge lies in trusting Tehran’s commitments.

“I’m highly skeptical… This is a regime for 47 years. They are pathological liars and they’re cheaters… It’s very difficult to take them at their word,” Keane said.

MARKETS HANGING ON ‘EVERY WORD’ AS US-IRAN CONFLICT NEARS ONE MONTH, FORMER NEC DIRECTOR WARNS

The negotiations, he noted, are taking place indirectly through intermediaries, even as both sides publicly signal conflicting positions about whether talks are happening at all.

Keane emphasized that U.S. and Israeli military leaders are confident they could meet their objectives through force if necessary, including reopening key shipping lanes and eliminating Iran’s ability to sustain attacks.

“If we can do that through negotiations… And we absolutely are confident that it’s real… It remains to be seen,” Keane said.

ENERGY PRICES COULD FALL ‘PRETTY SIGNIFICANTLY’ IF IRAN DEAL REACHED, ENERGY SECRETARY SAYS

He added that Iran’s motivations in any deal would likely center on regime survival, economic recovery and sanctions relief, raising further questions about how much the regime is willing to concede.

“We’ll see what this deal really entails when we get down to the specifics,” he said.

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