Welcome to this week’s Market Pulse, your 5-minute update on key market news and events, with takeaways and insights from the Sidekick Investment Team.
Today, we’re looking at the Iran conflict shutting down the world’s most important oil chokepoint, a downgraded UK growth forecast overshadowed by Middle East uncertainty, and the US government’s unprecedented move to blacklist AI firm Anthropic.
But first, our number of the week…
20 basis points
That’s how much Treasury yields rose this week following US-Israeli strikes in Iran. Rising yields indicate falling prices, the reverse of typical ‘safe haven’ dynamics in the Treasury market.
Sidekick Takeaway: In past crises, investors have rushed into government bonds for safety, pushing yields down. This time, inflation fears from surging oil prices have overpowered that instinct, with Deutsche Bank noting ‘no signs of safe haven demand’ in Treasuries. Gold’s similar decline means that investors have had little respite from the latest sell-off.
Only have a minute to read? Here’s the TL;DR:
- The Iran war has effectively shut down the Strait of Hormuz, through which roughly a fifth of global seaborne oil flows. Brent crude has surged over 20% to $85 per barrel, with analysts warning prices could reach $100 if disruptions persist for several weeks. Despite US market intervention, tanker insurance costs continue to soar.
- The OBR cut its 2026 UK growth forecast to 1.1% from 1.4% following weaker-than-expected Q4 data and poor business sentiment. However, the forecasts were finalised before the Iran conflict escalated, and higher energy prices risk pushing inflation above the 2.3% projection – complicating the BoE’s rate path.
- The Trump administration designated Anthropic a supply-chain risk after the AI firm refused to allow unrestricted military use of its models, the first time a US company has received the label. Consumer support surged, but the move threatens Anthropic’s enterprise business with any firm that has US defence exposure.
It’s important to note that the content of this Market Pulse is based on current public information which we consider to be reliable and accurate. It represents Sidekick’s view only and does not represent investment advice - investors should not take decisions to trade based on this information.
Strait to the Point: Iran War Chokes Global Oil Supply
For decades, energy analysts have debated what would happen if the Strait of Hormuz – the world’s most important oil chokepoint – were ever shut down.
Last week, the world got its answer. Following US-Israeli strikes on Iran, Iran’s military declared the Strait closed, warning that any vessel attempting to pass would be attacked.
The result has been swift. Tanker traffic through the Strait has effectively dropped to zero, with over 150 vessels stranded in open Gulf waters.
Markets weren’t just caught off guard by the closure itself, but also how it happened.
Military attacks trigger an insurance crisis
To shut down the Strait, Iran didn’t need to mine the waters or deploy warships.
That’s because a handful of drone strikes were enough to spook insurers into withdrawing war-risk coverage, leaving shipping companies unwilling to transit:
- Driven by soaring insurance costs, freight rates for supertankers hauling crude surged to an all-time high of $423,736 per day – a 94% increase in a single session.
- Brent crude has already risen by about 20% since the conflict began, reaching its highest level since mid-2024. Analysts warn that if disruptions persist, oil could reach $100 per barrel.
- US President Donald Trump has pledged to offer political risk insurance and said the US Navy would escort tankers if necessary. Nonetheless, prices have continued to rise as the conflict flares.
The disruption now extends well beyond oil. Qatar, one of the world’s largest natural gas exporters, has halted production after its facilities came under attack.
Sidekick Takeaway: The speed with which a few drone strikes brought the world’s most important oil chokepoint to a standstill is a reminder of the fragility of global energy infrastructure. The crisis also underscores the investment case for energy diversification and renewable infrastructure – assets that are not subject to the whims of a narrow waterway in a volatile region.
Spring Breakdown: UK Growth Forecast Cut as Iran Clouds Outlook
Rachel Reeves had hoped her Spring Statement would be a quiet affair – a simple forecast with no new policy announcements.
Instead, she delivered it against the backdrop of a rapidly escalating Middle East conflict that threatens to upend the UK’s economic outlook.
On Tuesday, the Office for Budget Responsibility lowered its 2026 growth forecast to 1.1%, down from 1.4% in November.
The OBR cited weaker-than-expected GDP at the end of 2025 and subdued business sentiment for its poor outlook. But even those revised figures may already be out of date.
A forecast overtaken by events
The OBR’s forecasts depend on anticipated economic support from the Bank of England’s rate cuts.
But the BoE’s policy path has been complicated by energy disruptions from the war in Iran:
- Inflation is projected to fall to 2.3% in 2026, but these forecasts were finalised before the Iran conflict escalated. The OBR warned that the war could have ‘very significant impacts’ on the UK economy.
- Markets have already scaled back expectations of a BoE rate cut in March to below 15%, a prospect that was viewed as highly likely just a short time ago.
- On the fiscal side, the news was somewhat brighter. Borrowing is forecast to fall by nearly £18 billion compared to autumn, substantially increasing the Chancellor’s headroom against her fiscal rules.
Reeves struck a cautiously optimistic tone, insisting the government has ‘the right economic plan.’
But with energy prices surging and inflation risks mounting, that plan faces a serious stress test in the months ahead.
Sidekick Takeaway: If oil prices remain elevated, the OBR’s inflation forecast might begin to look increasingly optimistic. With the BoE unlikely to cut rates as price pressures climb, it will be up to fiscal policy to provide economic support if conditions worsen.
Chain Reaction: US Labels Anthropic a National Security Risk
In July 2025, Anthropic became the first AI company to deploy a frontier model on the Pentagon’s classified networks.
Less than a year later, that partnership has collapsed. Last week, the Trump administration designated Anthropic a supply-chain risk – a label traditionally reserved for foreign adversaries.
The decision came after Anthropic refused to allow unrestricted military use of its models for mass surveillance and autonomous weapons.
US officials immediately banned all military contractors from doing business with Anthropic, threatening the enterprise relationships of one of the AI industry’s leading firms.
Consumer boost, enterprise risk
While the episode seriously threatens Anthropic’s enterprise business model, it appears to have dramatically boosted the firm’s consumer brand:
- Any company with US defence contracts – which include many of America’s leading firms – now faces pressure to certify it does not use Anthropic’s models.
- Nonetheless, consumers have shown strong support for Anthropic’s stand against the US government. This week, Anthropic’s Claude chatbot surged to No. 1 on Apple’s App Store, overtaking ChatGPT.
- Anthropic, valued at $380 billion and planning an IPO, has vowed to challenge the government’s designation in court.
The episode is a sharp reversal in the US military’s relationship with Anthropic.
As recently as January, Claude was reportedly used via Palantir’s classified systems in the US military operation to capture Venezuelan President Maduro.
Sidekick Takeaway: Previous tech booms – from the internet to smartphones – saw companies build first and face regulation later. The AI cycle is proving very different, with companies being forced to navigate military contracts, geopolitical flashpoints, and existential safety debates before many of their products are even mature.
Notices
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𝘗𝘭𝘦𝘢𝘴𝘦 𝘳𝘦𝘮𝘦𝘮𝘣𝘦𝘳, 𝘪𝘯𝘷𝘦𝘴𝘵𝘪𝘯𝘨 𝘴𝘩𝘰𝘶𝘭𝘥 𝘣𝘦 𝘷𝘪𝘦𝘸𝘦𝘥 𝘢𝘴 𝘭𝘰𝘯𝘨𝘦𝘳 𝘵𝘦𝘳𝘮. 𝘠𝘰𝘶𝘳 𝘤𝘢𝘱𝘪𝘵𝘢𝘭 𝘪𝘴 𝘢𝘵 𝘳𝘪𝘴𝘬 - 𝘵𝘩𝘦 𝘷𝘢𝘭𝘶𝘦 𝘰𝘧 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵𝘴 𝘤𝘢𝘯 𝘨𝘰 𝘶𝘱 𝘢𝘯𝘥 𝘥𝘰𝘸𝘯, 𝘢𝘯𝘥 𝘺𝘰𝘶 𝘮𝘢𝘺 𝘨𝘦𝘵 𝘣𝘢𝘤𝘬 𝘭𝘦𝘴𝘴 𝘵𝘩𝘢𝘯 𝘺𝘰𝘶 𝘱𝘶𝘵 𝘪𝘯.