Edward Meir's week in review and thoughts for the week of April 13, 2026

By the close of Wednesday’s session, we saw West Texas Intermediate (WTI) crude oil prices drop by a whopping $23/barrel in the 24 hours following the announcement. They settled down by about $15/barrel on the week. There were similar moves in Brent. Diesel and gasoline lost about $0.40/gallon and $0.80/gallon, respectively, at one point on Wednesday. But both trimmed their losses by week’s end.

Although crude futures experienced a substantial setback this week, we are not seeing the spot physical market loosening up. On the contrary, physical Brent prices ended the week at around $140/barrel, only $7/barrel off their record high. Why? The vastly reduced number of tanker sailings is keeping the market tight. As of the middle of last week, Reuters reported that around “130 million barrels of crude oil and 46 million barrels of refined fuels are currently floating on roughly 200 tankers in the region. … Another 1.3 million tons of LNG are also stuck on vessels awaiting safe passage. … But getting tankers out of the Gulf is one thing; persuading shipowners and charterers to send vessels back in is quite another,” Reuters noted.

Transit through the Strait of Hormuz opened up slightly, but could close up again this week (more on that later). Two Chinese-owned super oil tankers got through on Saturday. Also, about 30 break-bulk and container vessels passed since the cease-fire was announced. (Note that typical traffic through the Strait is about 100 vessels per day). Separately, the Wall Street Journal reported that two US warships passed through the Strait on Saturday. They were apparently beginning to clear mines. This was the first time that American warships have passed through the Persian Gulf since the war began.

Meanwhile, the Saudis said their crude production has fallen by 600,000 barrels a day. Meanwhile, restrictions on pipeline flows carrying their crude from the Persian Gulf to the Red Sea have diminished by roughly 700,000 b/d. (The 700K figure was surprising. We were under the impression the Saudi pipelines were operating with far less strain.) If these numbers are correct, Saudi output is now down by roughly 10% vs. the country’s normal production capacity of 12-13 million barrels a day. In other words, down some 1.3 million barrels per day.

Metals

In metals, a roughly 1.5-point decline in the general dollar index on account of the cease-fire announcement provided significant support to both the base and precious complexes. Copper ended up 3.3% on the week, zinc and tin gained 1.3% each, while nickel finished just about flat.

Lead ended the week with a 1% decline, as did aluminum. Aluminum has been tracking crude for the last several weeks. But we are seeing signs that this cross-correlation is beginning to fade. The reason: markets are focusing on the considerable damage done to several Gulf aluminum smelters. (We discussed the matter in last week’s note). The UAE’s Emirates Global Aluminum said it would need at least 12 months to restore its production. Precious metals ended the week stronger, with gold and silver each up by 2% and 4%, respectively.

Equities

In the US equity space, the S&P 500 finished up 3.6% for the week. Stocks have now just about erased all of their post-conflict decline. The NASDAQ and the Dow ended up by 4.7% and 3% on the week, respectively, after a monstrous rally set in on Wednesday that saw the Dow gain roughly 1,200 points on the day. US Q1 corporate earnings kick off this week and are expected to come in at an impressive +14% y/y. However, we suspect that investors will be more interested in what companies have to say—to the extent that they can—about the outlook going forward.

Weekend developments

Of course, Tuesday’s cease-fire announcement was only the first installment of a potential de-escalation of this conflict and the relatively easier one for the two parties to agree to. The more difficult stage occurred this past weekend and did not go as smoothly.

Negotiators from the US and Iran met for more than 20 hours in Islamabad, Pakistan, on Saturday going into Sunday. But they failed to reach agreement. “We just could not get to a situation where the Iranians were willing to accept our terms,” Vice President J.D Vance noted. Iran described the talks as being “full of mistrust and suspicion”. An Iranian foreign ministry spokesman added that there were “new complications” over the reopening of the Strait. Disappointingly, neither side mentioned the prospect of future talks, leaving the markets in a heightened state of anxiety going into this week.

Things then took an even more ominous turn after President Trump announced he would order the US Navy to block any vessels entering or exiting the Gulf. Apparently, this is an effort to deprive Iran from continuing its oil sales while increasing pressure on Iran’s customers to bring their influence to bear on Tehran. We suspect we will see another sizable bounce in crude and a resumed slide in both precious metals and base metals as the two parties now potentially resort to replacing talks with missiles.

Macro readings and other news from the past week

• The February PCE inflation report, which is not that relevant given that it reflects pre-war pricing, rose by 0.4% m/m, up from 0.3% in January. In the 12 months through February, prices advanced by 2.8%—the same margin as in January. The core rate was up by 0.4%. It’s been up by the same amount for the last three months. Annualized core PCE came in at 3%, slightly lower than the 3.1% increase seen in January.

• More concerning, but not particularly surprising, was the March CPI headline number. This reading rose by 0.9%, triple February’s levels and driven higher by the 11% m/m spike in energy prices. The core CPI was tamer, rising by 0.2% (consensus 0.3%). Although higher energy prices are usually blamed for causing inflation, we should note they are typically a one-off event. Either prices come down on their own, or their impact works through the system before leading to an element of demand destruction and/or slower growth. However, we still have more time to go before we approach a situation where crude prices start to buckle on their own or on account of demand pressures. Furthermore, unlike previous energy spikes, this one could stay in place for some time given that passage through the Gulf is paralyzed by threats of military action and not necessarily by military action itself.

• China’s factory-gate prices for March rose for the first time in more than three years. Producer prices rose by 0.5% from a year earlier, ending a staggering 41 months of consecutive declines. For the month as a whole, producer prices in the nonferrous mining and smelting/processing sectors rose by roughly 36% and 22% y/y, mainly on account of a surge in energy prices. Chinese consumer prices were far more restrained, with the CPI rising just 1% year-over-year after a 1.3% advance in February.

• University of Michigan consumer sentiment fell to a record low of  47.6, off by a whopping 6 points from the month prior. The Iran conflict was the main reason for the drop. There also was a rise in year-ahead inflation expectations.

• The March ISM-services index came in at 54.0% (consensus 54.9%), well below the prior reading of 56.1. Despite the m/m drop, the reading remains solidly in growth territory. However, the employment component was disappointing. It tipped into contraction territory. And the prices-paid index saw its biggest one-month increase in more than 13 years.  

• Durable goods orders decreased 1.4% m/m in February following a 0.5% decline in January. Excluding transportation, orders rose by 0.8% after a 0.3% increase in January. Otherwise, order activity was decent, highlighted by a 0.6% increase in new orders for non-defense capital goods, excluding aircraft—a proxy for business spending.

• Consumer credit increased by $9.5 billion in February after increasing by a  $7.7 billion in January.

• Weekly MBA mortgage applications index fell by 0.8%. But last week’s decline was much more substantial, at -10.4.

• February personal income decreased by 0.1% m/m (consensus 0.5%) while personal spending rose by 0.5% (consensus 0.6%). Again, this is February data. The March readings will be more revealing.

• We got our third estimate for Q4 US GDP coming in at 0.5% versus the second estimate of 0.7%. The downward revision was due primarily to a lowering of the investment component (to +2.3% from +3.3%). 

• Out of Europe, Reuters reports German industrial production fell unexpectedly in February, down by 0.3% compared with the previous month. Capital Economics expects Germany’s industrial production to remain weak for the balance of the year. And the German economy itself is expected to slip into contraction during Q1.

• Reuters reports that Russian aluminum produer Rusal plans to reroute some of its metal away from China and toward Japan and other Asian markets. We suspect this is on account of non-Chinese premiums soaring, giving Rusal much more revenue than what it could get from its existing Chinese customers, who presumably are picking up Russian units at significant discounts. Despite the attempted pivot away from Chinese customers, US sanctions might prevent Rusal from capitalizing on these higher-paying markets.

This week’s US macro readings

On Monday, we get March existing homes (expected to come in at 4.05 million units). Tuesday brings us the March NFIB optimism index, along with March producer prices (expected at 1.1%, last 0.7%). The core PPI is expected to come in at 0.4% (last 0.7%). On Wednesday, we get April Empire State manufacturing survey, the home builder confidence index (expected at 37, last 38), and the Fed Beige Book. Thursday brings us weekly initial claims (expected at 215,000, last 219,000), along with the Philadelphia manufacturing survey (expected at 12.4, last 18.1). March industrial production also comes out Thursday (expected at -0.1%, last 0.2%). 

We wish all our readers all the best this week!