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Trump Preparing for Long-Term Iran Blockade, But Also Exploring Military Strike Options; Energies Rise Sharply Higher, Gasoline and WTI ETFs Reach Multi-Year Highs; Yen Weakens, USD/JPY Reaches 18-Month High >160.50; ECB, Bank of England Expected to Hold Rates

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Daily Pivots: (S1) 158.51; (P) 158.86; (R1) 159.16; More… No change in USD/JPY’s outlook as consolidation continues below 160.45. Further rise is expected with 157.49 cluster support (38.2% retracement of 152.25 to 160.45 at 157.31) intact. On the upside break of 160.45 will target a retest on 161.94 high. However, firm break of 157.31/49 will […]

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Iran has come out with a statement that the US has failed to live up to their end of the bargain. And as such, the Iranian military has moved to "close" the Strait of Hormuz once again.

Iran is claiming that the US "did not fulfill their obligations" as the naval blockade is still ongoing. In response, Iran now says that the strait is returning to "strict control" and any vessels wishing to transit will require Iran's approval once again. In effect, that is a return to the previous status quo where the strait was in de facto closure. The statement reads:

"So long as the US does not ensure full freedom of navigation for vessels traveling from Iran to destinations and from destinations to Iran, the situation in the Strait of Hormuz will remain under strict control and in its previous state."

Earlier in the day, shipping data has shown a modest pickup in terms of activity along the strait. However, Iran clearly did not proceed with any full "reopening" as there were many vessels still turned back when trying to transit. Meanwhile, there are also still many ships hanging around and loitering awaiting further clarification despite the good news from yesterday.

This was activity along the strait earlier this morning, about a few hours before the latest Iran announcement.

Despite the supposed "reopening", there was still only a limited number of vessels and oil tankers that were permitted to pass through.

And now with the latest call by the Iranian military, I would imagine most vessels will be heading back to dock and everything returns back to near zero movement along the strait again.

It's all just like a fever dream. The brief "reopening" only lasted less than a day and now we're back to this.

At this point, Iran's actions on the Strait of Hormuz are what matters most. It's not so much about the political noise and messaging, especially from the US camp. Trump will always look to sell a victory and a positive statement but as mentioned many times last week, shipping data doesn't lie.

Politicians can paint whatever narrative they want about the situation. But if there still isn't any actual movement along the strait, global oil and gas supply will tighten further and physical prices will continue to squeeze higher.

Sure, your paper oil and futures might seem like the war is over. But if you step outside the house, you'll notice everything and anything around you is going to experience price hikes in the near future - some of it has already begun.

And that's going to be a big problem for many economies, that especially the longer this lasts.

Westpac sees little immediate labour market impact from the Iran war, but expects a delayed slowdown as energy shocks filter through.

Summary:

• March labour data unlikely to reflect Iran war impact yet
• Westpac sees unemployment dipping to 4.2% short-term
• Labour market to weaken later as oil shock feeds through
• RBA still focused on inflation, not labour softness near-term
• Key adjustment likely via fewer hours worked, not layoffs

Westpac’s preview of Australia’s March labour force report suggests the upcoming data will offer limited insight into the economic impact of the Iran war, with the labour market expected to remain resilient in the near term despite mounting risks.

The March survey period (March 1–14) captures only the early phase of the Middle East conflict, meaning any fallout from higher oil prices and global uncertainty is unlikely to be visible yet. Westpac expects employment to rise by around 25k, with the unemployment rate edging down to 4.2%, helped by a slight dip in participation.

However, this near-term stability masks a more concerning outlook. The labour market is typically a lagging indicator, and Westpac expects the real impact of the energy shock to emerge later in the year as higher fuel costs filter through to household spending, business margins, and hiring decisions.

Early signs of this transmission are already visible. Fuel spending has surged, while discretionary services consumption is beginning to soften, hinting at pressure building beneath the surface. Over time, this is expected to translate into weaker labour demand.

Westpac now sees employment growth slowing materially, with the unemployment rate rising to around 5% by early 2027. The adjustment is also expected to be uneven across industries, with fuel-intensive sectors such as manufacturing, construction, transport and tourism facing the greatest strain.

A key nuance is how firms respond. Rather than cutting jobs aggressively, businesses are more likely to reduce average hours worked — a pattern seen in more recent economic slowdowns, allowing them to retain staff while managing costs.

For the Reserve Bank, the implication is clear: despite a softening labour outlook, inflation risks tied to the energy shock remain the dominant concern. As a result, upcoming labour data is unlikely to materially shift near-term policy expectations.