The surge in energy costs has pushed confidence among small US companies down to its lowest level in almost a year.

The National Federation of Independent Business has reported that its Small Business Optimism Index dropped 3.0 points to 95.8 last month.

That pushes the index below its long-term average for the first time since April 2025 (the month of Donald Trump’s ‘Liberation Day’ tariffs).

Higher energy costs wiped out the benefits from taxes cuts, NFIB found.

NFIB chief economist Bill Dunkelberg explained:

“The 20% Small Business Deduction and other supportive small business tax provisions in the Working Families Tax Cut Act have had many positives for small business owners.”

“However, the dramatic spike in oil prices has spooked consumers and owners alike. Small business owners are having to absorb those higher input costs and pass them along to their customers.”

The Iran war has led to the biggest rise in global energy inflation in at least 25 years, new data suggests.

Swiss bank UBS has analysed the latest inflation reports from advanced and emerging economies, and found that energy prices rose by 5.5% on average in March. That exceeds the surge seen after the onset of the Russia–Ukraine conflict in March 2022.

UBS tracks inflation across roughly 45 major advanced and emerging economies; 27 have reported March data so far.

Arend Kapteyn, global head of economic and strategy research, told clients:

The increases were broad-based. Around two-thirds of reporting economies registered monthly gains in the 97th percentile or higher of their historical distributions, reflecting the globally synchronised shock to energy prices triggered by developments in the Middle East.

That said, there were a few exceptions. Energy inflation declined in Sweden—mainly due to a sharp fall in electricity prices (March was the warmest month ever recorded in Sweden) which offset strong fuel price increases—as well as in Estonia and Slovenia, while Chile also recorded only modest increases.

UBS has also found that the rise in headline inflation inflation remains slightly below the peak reached in March 2022.

Thats’s because there was also acute supply-chain disruptions and exceptionally strong post-pandemic demand four years ago, which led to price rises across a broader set of goods and services.

Chancellor Rachel Reeves has blasted Donald Trump over his ‘folly’ for starting the Iran war without an exit plan.

In an interview with the Daily Mirror, Reeves says she is “very frustrated and angry” about the situation.

She says:

“This is a war that we did not start. It was a war that we did not want. I feel very frustrated and angry that the US went into this war without a clear exit plan, without a clear idea of what they were trying to achieve.”

“And as a result the Strait of Hormuz is now blocked,” the Chancellor added. “We are hosting a conference this week with President Macron of France on how to secure passage through the Strait of Hormuz.

Reeves (who is heading to Washington DC for the IMF’s spring meetings this week) points out that before the conflict, inflation was expected to fall, allowing more cuts to interest rates.

She adds:

“Obviously no sensible person is a supporter of the Iranian regime, but to start a conflict without being clear what the objectives are and not being clear about how you are going to get out of it, I do think that is a folly and it is one that is affecting families here in the UK but also families in the US and around the world.”

The European steel industry has said radical new measures to double tariffs on steel imports and halve duty-free quotas (see earlier post) will help pull the industry “back from the brink” of collapse.

Faced with unprecedented cheap imports from China and elsewhere, the industry has for the last year pleaded with Brussels to introduce trade measures to deal with the sheer volume of competition for local manufacturers.

Axel Eggert, director general of the European Steel Association (EUROFER), said:

‘European steel has been standing at the edge of a cliff and this trade measure helps pulls us back from the brink. By curbing unsustainable import pressure, it supports viable domestic steel capacity and enables the industry to continue its decarbonisation.

“It will bring back 15 million tonnes of EU steel-making capacity utilisation, while helping preserve around 30,000 direct jobs and 200,000 indirect jobs in Europe’’.

The new tariffs and quota system agreed in late night talks by the European Parliament and member states will see quotas imposed in each of the 28 steel product sectors and could impact exports from the UK as well as countries like China.

Newsflash: The International Energy Agency has cut its forecasts for global oil demand this year, as the Iran war drives up prices.

In its latest oil market report, the IEA warns that supply and demand will both be hurt by conflict in the Middle East.

Oil demand is now forecast to fall by 80,000 barrels per day in 2026, down from last month’s forecast that demand would rise by around 640,000 bpd.

That would be the first annual fall in demand since the 2020 Covid-19 pandemic, according to Bloomberg.

The IEA expects demand to fall sharply in the current quarter, in the fastest rate since 2020:

A forecast 1.5 mb/d 2Q26 decline would be the sharpest since Covid-19 slashed fuel consumption. Initially, the deepest cuts in oil use have come in the Middle East and Asia Pacific, mainly for naphtha, LPG and jet fuel.

However, demand destruction will spread as scarcity and higher prices persist.

The IEA also flags that global oil supply plummeted by over 10 million barrels of oil per day in March, to 97 mb/d. It says continued attacks on energy infrastructure in the Middle East and ongoing restrictions to tanker movements through the Strait of Hormuz have led to the largest disruption in history.

The IEA’s forcast is based on a scenario where regular deliveries of oil and gas from the Middle East to international markets resume by the middle of this year.

But, in a more pessimistic scenario where risks to energy production and trade in the Middle East remain high, “energy markets and economies around the world need to brace for significant disruptions in the months to come”, the IEA adds.

Away from the Iran war, the EU has agreed proposals to double tariffs on steel imports to 50% in a moved aimed at curbing Chinese imports but which the UK industry has previously said posed an “existential threat” to the UK industry.

The decision by the European Parliament and member states to approve the proposal, which will also see duty free quotas halved, will come into force in July and will replace the existing safeguards dating back to 2018.

At the same time a similar measure will be introduced by the UK whose policy up to now was aligned with the EU thanks to previous membership of the EU.

The EU is expected to later announce duty free quotas for third countries including the UK, with pressure on the bloc to be generous to the UK.

Negotiations will now start under World Trade Organization rules for quotas on 28 steel products.

Norway, Iceland and Liechtenstein will not be subject to tariffs as they are members of the European Economic Area, further highlighting the economic disadvantage of the UK.

The EU is the UK’s most critical market with about 78% of steel exported to the bloc, accounting for just under 1.9m tonnes in 2024.

The new quota, which will be split with all non EU and non EEA countries will be reduced by 47% to 18.3m tonnes a year.

Last October Alasdair McDiarmid, the assistance general secretary at steelworkers’ union Community, said the new measures posted “an existential threat” to the UK industry.

Stocks are pushing higher across Europe, following reports that peace talks to end the Middle East conflict could resume this week.

Reuters reported that negotiating teams from the U.S. and Iran could return to Islamabad this week, after talks last weekend in the Pakistani capital ended without a breakthrough.

Germany’s DAX share index has risen by 1%, while France’s CAC 40 is up 0.35% and Italy’s FTSE Mib is 0.6% higher.

Britain’s FTSE 100 is rising higher too – now up 28 points or 0.27% at 10,611 points.

Britain’s stock market has opened calmly, with the FTSE 100 share index rising by just 0.05%, up 5 points to 10,589 points.

Mining stocks are rising, led by Fresnillo (3.3%) and Antofagasta (+2.8%).

But tobacco firm Imperial Brands (-4.2%) are leading the fallers; it warned this morning that “the conflict in the Middle East has resulted in a more uncertain geopolitical and macro environment.”

The boss of banking giant HSBC has warned that the conflict in the Middle East is starting to hurt client confidence.

Georges Elhedery also told Bloomberg TV that broader “uncertainties” weighing on confidence too, saying:

“We’re saddened and concerned with what’s happening in the Middle East, and we’re concerned not just with what’s happened, but also with how long this will take.

Unfortunately, some of these uncertainties have initially started to weigh on general confidence.

“We worry that the continuation of this conflict will have that impact globally, way beyond the Middle East.”

The Middle East conflict has provided lucrative opportunities for BP.

The energy giant told the City this morning that it expects to post an “exceptional” results from oil trading in the first quarter of the year – a period in which the oil price spiked after the Iran war began.

BP is also predicting “stronger realized refining margins” for the quarter, but cautioned that its oil production & operations production will be “slightly lower” than in the fourth quarter of 2025.

UK chancellor Rachel Reeves is making the trip to Washington DC for the IMF/World Bank spring meeting.

Before crossing the Atlantic, Reeves warned that families and businesses across Britain are bearing the cost of instability “they did not cause”, adding:

“The Iran conflict must be a line in the sand on how we deal with global crisis and instability.

“I will go to America with a clear message: global leaders must take co-ordinated economic action and supercharge the path to energy security to protect ourselves in the future.”

The oil price is dipping today, on renewed hopes of a resolution to the Iran war.

Brent crude is trading below $100 a barrel again, at $98.35, even though the US blockade on Iran’s ports came into effect yesterday.

Investors are hopeful that Trump’s latest ratcheting up of the pressure on Tehran will help lead to a breakthrough in peace talks.

Michael Brown, senior research strategist at Pepperstone, explains:

President Trump’s blockade of the Strait of Hormuz got underway yesterday, applying to all vessels making their way to or from Iranian ports. Is this a negotiating gambit, designed to choke off Iranian oil revenues, and force Iran back to the table? Almost certainly, it is, with it being just the latest instalment of the ‘escalate to de-escalate’ strategy that markets have come to be so familiar with over the last 15 months or so.

That this latest manoeuvre is being viewed through this lens helps explain the relatively swift way in which markets were able to shrug off the weekend’s developments. Not only did stocks pare opening declines, allowing the S&P future to trade above its pre-conflict close and to turn positive on the year once more, but haven demand for the greenback evaporated as the day wore on, and Govvies rebounded to end proceedings a rounding error away from the unchanged mark.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Finance ministers, central bankers and economists from around the world are gathering in Washington DC, with the Iran war casting a gloomy shadow over the world economy.

The International Monetary Fund’s (IMF’s) and World Bank’s spring meeting is kicking off – later today, we’ll hear the Fund’s latest economic forecasts; they’re expected to include a cut to the growth outlook due to the Middle East conflict.

The Fund has already warned that the “economic scars” of war could take more than a decade to recover from.

Last night, the heads of the International Energy Agency (IEA), the IMF and the World Bank warned that the war was having a “substantial, global, and highly asymmetric” impact on the world economy, disproportionately affecting energy importers, in particular low-income countries.

They warn:

The shock has led to higher oil, gas and fertilizer prices, triggering concerns about food security and job losses as well. Some oil and gas producers in the Middle East have also seen a dramatic loss of export revenue.

With the US blockading the strait of Hormuz yesterday, the IMF, IEA and World Bank chiefs add:

“The situation remains very uncertain, and shipping through the Strait of Hormuz is yet to normalize. Even after a resumption of regular shipping flows through the Strait, it will take time for global supplies of key commodities to move back towards their pre-conflict levels—and fuel and fertilizer prices may remain high for a prolonged period given the damage to infrastructure.

They also warn that shortages of key inputs will hurt industries including energy and food, and that the war has forcibly displaced people, impacted jobs, and reduced travel and tourism.

The agenda

• 10am BST: IEA Oil Market Report

• 1.30pm BST: US PPI for March

• 2pm BST: IMF’s World Economic Outlook report published

• 3.15pm BST: IMF’s Global Financial Stability Report published