Preview – Bank of England to hold rates as Middle East conflict lifts inflation risksThe Bank of Japan held its short-term policy rate at 0.75%, as widely expectedTrump warns of massive retaliation tied to South Pars as energy risks escalateAustralia jobs surge masks softening as RBA tightening path stays intactPBOC sets USD/ CNY reference rate for today at 6.8875 (vs. estimate at 6.8955)Japan warns on speculative FX moves, keeps intervention option in focusRBA warns Middle East conflict could trigger global shock and market repricingAustralian February 2026 unemployment rate 4.3% (expected 4.1%, prior 4.1%)U.S. weighs troop deployment to secure Hormuz in major escalation stepVessel hit off UAE coast as maritime risks escalate in GulfS&P flags global growth risks from Middle East war and oil disruptionECB to hold rates at 2% but signal hikes if Iran war fuels inflation – previewUAE suspends Habshan gas operations after missile interception incidentNew Zealand growth undershoots as domestic demand softensIran warns of total destruction of energy infrastructure in escalation threatTrump says does not want more strikes on Iran energy facilities, then says “but”Reports that Trump is gearing up his military to take control of the Strait of HormuzinvestingLive Americas FX news wrap 18 Mar; Powell more hawkish on inflation.USD/yields up
At a glance:
Oil surges as strikes hit major Middle East energy infrastructure
South Pars and Ras Laffan targeted, escalating LNG supply risks
Iran launches multi-country retaliation across Gulf and US-linked assets
Qatar LNG facilities hit twice, fires and extensive damage reported
Trump signals de-escalation on South Pars but issues extreme retaliation threat
US weighing troop deployment, including Hormuz security options
Saudi rhetoric hardens, signalling regional escalation risk
Asia equities fall, USD trims gains amid risk volatility
Oil markets dominated the session as escalating attacks on energy infrastructure across the Middle East drove sharp gains, before prices pared much of the advance following de-escalatory signals from U.S. President Donald Trump.
Crude had surged after Israel struck Iran’s South Pars gas field and the Asaluyeh oil facility on Wednesday, marking a major escalation into critical energy assets. Iran responded with a broad retaliation, including a strike on Qatar’s Ras Laffan complex, the world’s largest LNG hub, accounting for around 20% of global supply. Qatari authorities later confirmed further attacks on LNG facilities, with fires and extensive damage reported.
The conflict widened materially, with Iran launching strikes across multiple countries targeting Gulf states, U.S. assets, and key infrastructure, underscoring the risk of a broader regional confrontation.
Energy security concerns intensified after Iran warned it could escalate to the “complete destruction” of energy infrastructure if attacks continue, while unconfirmed reports pointed to a potential strike on Saudi Arabia’s Yanbu refinery, an important alternative export route that bypasses the Strait of Hormuz.
From Washington, Trump struck a mixed tone, seeking to calm markets by signalling no further Israeli attacks on South Pars, while warning the U.S. could “massively” destroy the field if Qatar’s LNG infrastructure is hit again. The comments helped cap oil’s upside into the latter part of the session.
Separately, Reuters reported the U.S. is considering deploying thousands of additional troops to the region, including options to secure the Strait of Hormuz and potentially position forces along Iran’s coastline, moves that would mark a significant escalation.
Regional tensions were further amplified by a deterioration in diplomacy, with Qatar expelling Iranian diplomatic staff and Saudi Arabia issuing unusually direct warnings, signalling the collapse of a fragile detente.
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In other developments, Australia’s February labour market report painted a mixed picture. Employment rose strongly for a third consecutive upside surprise, but the details were softer, with a sharp drop in full-time jobs and a rise in the unemployment rate as participation increased. The data is unlikely to derail the Reserve Bank of Australia’s tightening bias following back-to-back rate hikes, with markets still focused on inflation risks, particularly those tied to the Middle East-driven energy shock.
The RBA reinforced those concerns in its Financial Stability Review, warning the conflict could trigger a severe global shock, including disorderly asset repricing and renewed inflation pressures, even as it noted domestic financial resilience.
In Japan, the Bank of Japan left policy unchanged in an 8–1 decision, though dissent from board member Takata highlighted a more hawkish tilt, with calls for a rate hike on the view that inflation dynamics are already consistent with the 2% target.
Across markets, Asia-Pacific equities declined following losses on Wall Street (Japan’s Nikkei is down more than 2.5%), while the U.S. dollar partially retraced recent gains as volatility remained elevated.
This article was written by Eamonn Sheridan at investinglive.com.