Iran Moves Its Own Oil Through Hormuz, Stocks Rise in Runup to Fed | The Opening Trade 3/18/2026
Speakers
Summary
- Markets are exhibiting a "risk-on" bias with equities higher and oil prices down ~1.7%, attempting to decouple from the Iran war narrative. Key catalysts include the resumption of ~400k bpd of Iraqi oil exports via a pipeline to Turkey and a focus on semiconductor optimism.
- The Iran war remains the dominant macro overlay. Iran controls transit through the Strait of Hormuz, allowing only Iranian-linked or "friendly" nation vessels. The confirmed killing of security chief Ali Larijani is seen as an escalatory factor, with the IRGC vowing retaliation.
- The Federal Reserve's reaction function is in focus, balancing upside inflation risks from energy against softening labor market data. The market has whipsawed, currently pricing one cut in 2026. Several speakers view Chair Powell as a potential lame duck, with attention shifting to his likely successor.
- A significant theme is the large amount of "dry powder" sidelined in money market funds (~$9.3T globally), which could fuel a risk asset rally if geopolitical uncertainty recedes. Liquidity managers note institutional cash balances are elevated as a safe-haven play.
- European central banks (ECB, BoE) are expected to be less hawkish than initially feared post-energy shock, as the magnitude is seen as smaller than 2022, fiscal support is more limited, and activity data is weak (e.g., Germany).
- Semiconductors/AI are a powerful counter-narrative to war worries. NVIDIA securing licenses to produce H200 chips for China opens a new revenue stream. South Korean chipmakers (Samsung, SK Hynix) rally on supply tightness and multi-year contract discussions.
- M&A and IPO pipelines, particularly in Europe, are described as robust and "double-digit," with clients forward-leaning. Activity is driven by growth, with focus on financials, infrastructure, defense, and energy transition, though timing may be affected by volatility.
- Specific corporate developments: Unilever is considering a separation of its food assets; BHP appointed a new CEO with a focus on copper growth and M&A discipline; HeidelbergMaterials was upgraded by Morgan Stanley.
- A key risk is the duration of the Strait of Hormuz closure. A short conflict implies a manageable energy shock; a protracted one could shift the narrative from stagflation to recession, as current fiscal buffers are weaker than in 2022.
- The dollar's muted reaction to the crisis is noted, attributed to unwinding of crowded long positions. If the conflict resolves, a weaker dollar and reallocation into beaten-down Asian equities (especially tech/semiconductors) and commodity exporters (LatAm) are seen as potential plays.
Trade Ideas
Speaker states NVIDIA has licenses to start production of its H200 chips designed for the Chinese market and will begin shipping, opening a revenue stream from which it had taken a conservative "zero revenue" approach. China is a massive market for semiconductors, and regaining access reverses a prior revenue headwind. Reuters reporting confirms Chinese companies have also received the green light from authorities. This is a clear positive catalyst for NVIDIA's revenue growth and market expansion. Further escalation of US-China trade/tech restrictions could again limit market access.
The speaker discusses massive inflows into money market funds (~$9.3T) as sideline cash seeking safety. Separately, PIMCO warns of "mounting strains" and a "deep rethinking" in the $1.8T private credit market due to liquidity risk and high-profile blow-ups. Risk aversion is driving capital to ultra-safe, liquid assets (money markets) and away from credit risk. Concurrent stress in private credit suggests the asset class is facing a reality check on loan quality and liquidity, making it unattractive. The combination indicates a cautious stance on financial risk assets, particularly in less liquid credit segments. Capital preservation is prioritized. A swift resolution to the Iran war could trigger a rapid reversal out of cash and into risk assets, but private credit's structural issues may persist.
Sophie Winn
Portfolio Manager & Strategist in Dynamic Asset Allocation, BNP Paribas Asset Management
58:20
The speaker explicitly states that if energy supplies stabilize, the market should return to high-spending and semiconductor themes. She favors Asian equity markets due to "amazing EPS growth" and corporate governance support, which includes semiconductor-heavy indices. The semiconductor sell-off was partly due to fears of energy supply disruptions to the chip supply chain. A resolution removes this overhang, allowing fundamentals (strong demand, tight supply) and the AI-driven capex cycle to reassert themselves. The sector is a primary beneficiary of a de-escalation in the Iran conflict, with Asian tech offering attractive re-entry points. The Iran war prolongs, keeping energy volatility high and continuing to threaten semiconductor manufacturing logistics.
Unilever is said to be considering a separation of most or all of its food assets (e.g., Hellmann's, Marmite), potentially valuing the business at tens of billions. However, a Barclays analyst expressed skepticism about investor appetite for another "painful multi-year exit process." A spin-off could unlock value by streamlining Unilever's portfolio towards faster-growing home/personal care segments, but the market may be wary of the complexity and execution risk given the company's recent history. The corporate action is material and warrants close monitoring, but immediate investor reception appears mixed. The transaction may not proceed, or if it does, it could be value-destructive if executed poorly or timed badly.
BHP named Brandon Craig, a 25+ year company veteran, as its new CEO. He emphasized "discipline" regarding M&A and underlined a strategic pivot towards growing in copper, mentioning a "shift in the centre of gravity" towards copper-rich regions like the US, Chile, and Argentina. The appointment signals continuity and a safe pair of hands to execute the long-term shift from iron ore to future-facing commodities like copper, which is critical for electrification. The leadership transition is smooth and reinforces a focused growth strategy in copper, but the immediate M&A outlook is cautious. A sustained slowdown in Chinese demand for iron ore (half of BHP's earnings) before copper growth offsets it. Execution risk on copper projects.
Oil prices are down due to Iraq resuming ~500k bpd of exports via a pipeline to Turkey, bypassing the blocked Strait of Hormuz. However, Iran is effectively policing the Strait, allowing only its own and some "friendly" nation vessels through, sustaining a physical supply risk premium. The market is balancing a near-term physical supply relief (Iraq-Turkey) against a still-escalating conflict that keeps the world's key oil chokepoint severely restricted. The situation remains fragile and dependent on Iran's actions. Oil is in a volatile, headline-driven holding pattern. The direction hinges on the duration of the Strait's closure and the success of alternative export routes. A major escalation (e.g., successful Iranian strike on Gulf state infrastructure) or a prolonged multi-month closure of the Strait could send prices sharply higher.
Up Next
This Bloomberg Markets video, published March 18, 2026, features Tom Mackenzie, Deborah Cunningham, Sophie Winn, Charlie Wells, Martin Ritchie, Anthony DiPaola discussing NVDA, XLF, XLK, UL, BHP, WTI. 6 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Tom Mackenzie, Deborah Cunningham, Sophie Winn, Charlie Wells, Martin Ritchie, Anthony DiPaola · Tickers: NVDA, XLF, XLK, UL, BHP, WTI