Weekly house view | No war, no peace, no oil
The week in review
The United Arab Emirates (UAE) said it was leaving OPEC after almost 60 years, dealing a big blow to the oil cartel. The move by OPEC’s third-largest producer will likely be negative for the oil price in the medium term, as the UAE could have significant spare capacity to deploy once the Strait of Hormuz reopens. In its first meeting following the UAE decision, OPEC+ agreed an increase in oil output of 188,000 barrels per day – news that on its own will do little to mitigate the blockade of the Strait. However, President Donald Trump said the US will begin to guide stranded ships out of the Strait and described talks with Iran as “very positive”.
In fresh signs that the world is splintering into rival blocs, China blocked Meta's USD 2bn acquisition of AI start-up Manus, and Canada said it would set up a sovereign wealth fund with initial funding of CAD 25 bn.
In the corporate world, almost two thirds of S&P 500 companies have reported earnings, with 84% beating earnings per share expectations. Despite the Iran conflict, guidance remains strong. The S&P 5001 rose 0.9% last week. The biggest tech companies continue to spend more on artificial intelligence infrastructure than expected and the SOX semiconductor index had its second-best monthly performance ever in April. AI usage is growing strongly.
Quote of the week
The head of research at Gunvor, one of the world’s largest oil traders, warned it was a matter of weeks before “huge pain” as economies have to stop using fuel and face recession. “The tipping point is clearly June,” he added.
Key data
The Eurozone Economic Sentiment Indicator (ESI) fell to its lowest point since the Covidpandemic.
Euro area banks reported a further net tightening of credit standards in the first quarter of 2026.
The European Central Bank’s latest Consumer Expectations Survey (CES) showed a significant rise in consumer inflation expectations.
