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European Equities · Geopolitical Risk · Iran Conflict · Oil Markets
European stocks saw small gains on March 31, 2026, driven by hopes for de-escalation in the Iran war, even as oil prices surged towards a record monthly rise, with Brent crude up 1.5% to $114.44 a barrel.
This mixed market reaction occurred after Iran attacked an oil tanker, but a Wall Street Journal report indicated President Donald Trump is willing to end the military campaign even if the Strait of Hormuz remains largely closed. The conflict, which began February 28, caused oil prices to surge due to Iran's effective closure of the Strait of Hormuz, which carries about a fifth of the world’s oil supply.
Europe’s STOXX 600 was up 0.7% on the day but remained on track for its steepest monthly loss since 2022, breaking an eight-month winning streak. U.S. West Texas Intermediate futures were up 0.5% at $103.36.
The oil shock pushed Eurozone inflation past the European Central Bank’s 2% target in March. Eurozone government bond yields were steady, with the German 10-year bond yield at 3.0324%.
The dollar was on track for its biggest monthly gain since July as a safe-haven, while gold was up 1.1% but set for its biggest monthly drop since 2008. Robeco's Colin Graham stated that prolonged closure of the Strait of Hormuz increases recession probabilities.
The European Union's energy chief warned governments to prepare for "prolonged disruption" to energy markets. Pakistan is exploring re-flagging ships to utilize Iran’s agreement allowing 20 vessels through the Strait of Hormuz, as reported by Bloomberg.
