World recession warning as Trump 'loses control' of Iran war

 The world risks plunging into recession as Donald Trump appears to have “lost control” of the Iran war, a City bank has warned.

Major economies face a “real risk of an inflationary recession” if the conflict in the Middle East drags on, according to Peel Hunt, which said it could not rule out higher rates. 

Even a swift end to the conflict now would fail to end economic disruption for at least another two weeks, it warned.

The investment bank said a quick resolution to the war had become harder for the US president to achieve. This “increases the risk that the Strait of Hormuz remains blocked even once fighting ends”, it added.

Mr Trump was considering ending the war without a deal to reopen the waterway, according to the Wall Street Journal, despite its importance as a shipping route for a fifth of the world’s oil and gas exports.

On Tuesday, the US president told Britain and other countries to “go get your own oil” and to take the Strait of Hormuz for themselves to fix the energy crisis triggered by its closure.

Kallum Pickering, chief economist at Peel Hunt, said: “Donald Trump may have lost control of the situation, which makes a quick (unilateral) resolution harder and increases the risk that the Strait of Hormuz remains blocked even once fighting ends.”

He said the energy shock from the war “appears to be spreading from West to East – with shutdowns already in place in parts of Asia and Australia”.

“If Europe is next, this will amplify global recession fears,” he said.

Eurozone inflation jumped from 1.9pc to 2.5pc in March, its steepest rise since 2022, as energy prices surged by 4.9pc off the back of the Iran war, official figures released on Tuesday showed.

The consultancy Capital Economics the risks of a global recession would increase further in the event of attacks by Houthis on shipping in the Red Sea. The Iran backed group joined the war for the first time at the weekend as they fired rockets at Israel.

Mr Pickering warned: “If the war drags on, there is a real risk of an inflationary recession unfolding in major economies, with central banks struggling to ease policy until inflation risks fade. Rate hikes could not be ruled out.”

Sir Keir Starmer urged businesses to help the Government protect households from soaring prices on Monday. In a Downing Street meeting, he told bosses that “the Government can’t do it on its own”.

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Thanks for following our coverage of the war in Iran and the fallout of the fighting on global oil and gas markets. 

British stocks post biggest monthly drop since 2020

British stocks have logged their biggest monthly drop since 2020, as surging oil prices due to fighting in the Middle East have led to widespread concerns about inflation. 

The FTSE-100 index of Britain’s leading listed companies has fallen by 5.6pc in March, wiping out almost all the gains made since the start of the year. 

At the same time, the FTSE-250 index of mid-cap stocks is also down 9.5pc since the start of the month amid concerns about the economic impacts of the war on Britain’s economy. 

The UK is expected to face a worse economic impact from the war in Iran than any other major economy, according to the Organisation for Economic Co-operation and Development (OECD). 

Official data from the ONS also confirmed that Britain’s economy barely expanded at the end of 2025, adding to the challenge for the government to keep  growth on track this year with the ‌Iran war likely to push up inflation and hit demand.

05:58pm

EU countries should encourage fuel saving measures, Brussels says

The EU Commission has said member states should consider promoting voluntary fuel-saving measures to help stabilise energy markets in the face of disruption due to the war in Iran.

In a letter to the EU’s energy ministers, Dan Jørgensen, the bloc’s commissioner for energy, said member states should consider introducing voluntary measures to cut oil consumption.

Mr Jørgensen’s letter pointed to policies listed by the International Energy Agency (IEA) to help save fuel, including encouraging car sharing and working from home.

The energy commissioner added that EU countries should be prepared for “prolonged disruption” to energy markets due to war with Iran.

EU countries should also refrain from any introducing any policies that might increase oil consumption, Mr Jørgensen said.

05:19pm

Iran threatens US tech giants over ‘targeted assassinations’ of leaders

Iran’s Revolutionary Guards have threatened to target American tech companies including Apple, Google and Meta if any more of the country’s leaders are killed in “targeted assassinations” by the US and Israel.

In a post listing 18 American tech companies, the Iranian Revolutionary Guard Corps (IRGC) said it would retaliate against any attacks by targetting the firms.

“These companies, starting from 8:00 pm (1630 GMT) Tehran time on Wednesday, April 1, should expect the destruction of their relevant units in exchange for every assassination in Iran,” the Guards said in a statement listing the names of 18 companies it alleged were complicit in the killing of officials.

“We advise the employees of these institutions to immediately leave their workplaces to preserve their lives,” it added.

The IRGC said tech giants including Microsoft, Palantir, Nvidia, Tesla and Oracle also risk being targetted if the attacks on Iran’s leaders continue.

Supreme leader Ali Khamenei and Revolutionary Guards commander-in-chief Mohammad Pakpour were both killed on the first day of the war on February 28.

Ali Larijani, Iran’s powerful security chief, was separately killed by an Israeli strike on 17th March.

03:32pm

Now brace for an even bigger oil shock

The world has lost over a tenth of its daily oil supply, along with critical volumes of jet fuel, diesel and refined petroleum products. Now prepare for loss of the next tenth, hitting just as all the short-term fixes are exhausted.

This is not a remote tail risk. It is an all-too-plausible outcome as Donald Trump concentrates the 82nd Airborne Division and US marines to “take the oil” on Iran’s Kharg Island.

The supply crisis has already escalated over the last few days in two critical theatres beyond the Strait of Hormuz. Goldman Sachs says investors are buying call options on oil at a strike price of $450 a barrel.