Oil Hit $150. AI Kept Building.

GOOD MORNING, Tuesday's index moves looked calm. The underlying market was not. The S&P 500 and Nasdaq eked out small gains as investors waited for President Trump's Hormuz deadline, but physical crude prices told a much more urgent story: some immediately deliverable barrels traded near $150 even while Brent futures sat far lower. At the same time, AI infrastructure kept expanding. Broadcom signed a long-term deal to build Google's custom chips through 2031, and Intel joined Elon Musk's Terafab project. After the U.S. close, Trump announced a two-week ceasefire with Iran. That may change the direction of the oil trade. It does not change what Tuesday revealed: scarcity is already real, while the AI buildout is still moving forward.

MARKETS | TLDR

Wall Street finished nearly flat ahead of Trump's Iran deadline: The Dow fell 0.18% to 46,584.46, while the S&P 500 rose 0.08% to 6,616.85 and the Nasdaq gained 0.10% as investors waited for a binary escalation-or-deal outcome.
Physical crude prices approached $150: North Sea Forties crude reached $146.09 and Dated Brent hit $144.42 as refiners scrambled for barrels that could actually be delivered now.
The ceasefire changed the overnight setup: Shortly before his deadline, Trump announced a two-week U.S.-Iran ceasefire brokered by Pakistan, creating hope that Hormuz traffic could eventually resume even though the strait had not yet reopened.

PHYSICAL SCARCITY

The Real Oil Price Was Already Near $150

Oil futures were not capturing the full stress in the energy market. On Tuesday, North Sea Forties crude reached $146.09 a barrel and Dated Brent — the benchmark for physical cargoes — hit a record $144.42. That was almost $20 above the nearby Brent futures price. Refined products were under similar pressure, with European jet fuel near $226 a barrel and diesel above $200.

That gap matters because businesses pay for physical barrels, not abstract futures curves. Iran's effective closure of Hormuz had removed at least 12 million barrels per day of Middle Eastern supply from normal trade routes, forcing European and Asian refiners to compete for immediately available alternatives. Morgan Stanley analysts described the stress as concentrated in the part of the market closest to the physical shortage.

The implication reaches far beyond oil equities. Airlines, logistics companies, chemicals producers and manufacturers can face input costs based on spot cargo scarcity even when headline futures look less extreme. If those costs persist, the inflation pass-through can be stronger than a casual glance at Brent suggests. Tuesday's market therefore contained a hidden stagflation signal: financial prices looked manageable, while the real economy was paying crisis-level energy prices.

CUSTOM SILICON

Google Is Locking In Its AI Chip Supply Through 2031

Broadcom signed a long-term agreement with Google to develop and supply future generations of custom AI chips and rack components through 2031. The chipmaker also struck a deal tied to roughly 3.5 gigawatts of AI computing capacity for Anthropic using Google's processors beginning in 2027. Broadcom shares rose after the announcement.

That matters because hyperscalers are increasingly treating custom silicon as a strategic lever rather than a side project. Google's TPUs give it an alternative to Nvidia GPUs, potentially lowering inference and training costs while creating another source of cloud differentiation. The long duration of the Broadcom agreement suggests Google expects AI compute demand to remain structurally high well beyond the current product cycle.

The deal also shows how the AI ecosystem is becoming more interconnected. Anthropic uses AWS Trainium, Google TPUs and Nvidia GPUs, while Amazon remains its primary cloud partner. Instead of one dominant hardware architecture, frontier AI is increasingly being financed and delivered through a portfolio of chips, clouds and long-term capacity commitments. That makes semiconductor supply chains broader — but also more capital intensive.

HEADLINES

Intel joins Elon Musk's Terafab project: Intel will participate alongside SpaceX and Tesla in a project targeting 1 terawatt per year of compute capacity, giving its turnaround another potentially important AI foundry and manufacturing relationship.
Broadcom rises on Google's custom-chip commitment: The agreement through 2031 reinforces custom accelerators as one of the clearest alternatives to Nvidia's GPU-centric model.
Health insurers surge on Medicare Advantage rates: UnitedHealth jumped 9.4% in the regular session after CMS raised 2027 payment rates more than expected, potentially adding over $13 billion of industry payments.
Goolsbee warns about a stagflation shock: The Chicago Fed president said the Iran war could raise inflation while weakening growth, precisely the combination physical oil prices were beginning to signal.
Apple falls on foldable-phone delays: Shares dropped 2.1% after a report of engineering setbacks, a reminder that company-specific execution risk still matters even when macro and AI narratives dominate the tape.

UPCOMING

March CPI — April 10: The first major inflation report after the Hormuz shock will show how quickly higher gasoline and energy costs are entering consumer prices.
TSMC March revenue — April 10: Monthly sales will provide the next high-frequency check on whether advanced-chip demand is holding up despite war-driven volatility.
Major bank earnings — April 13-15: Banks will give an early read on whether higher energy costs and market volatility are changing credit conditions, dealmaking or consumer behavior.
March PPI — April 14: Producer prices will be especially important because physical energy costs are already running far hotter than futures benchmarks imply.

DEEP INSIGTHS

Why Physical Oil Was Trading Near $150

Read this for the difference between a futures headline and a real supply shortage. Dated Brent and Forties were setting records because refiners needed deliverable barrels immediately, making the physical market a better gauge of near-term inflation pressure than the front-month futures contract alone.

Google's Long-Term Custom AI Chip Strategy

This is useful for understanding the next stage of AI infrastructure competition. Google's Broadcom agreement runs through 2031 and links custom TPUs to multi-gigawatt Anthropic capacity, showing that hyperscalers are locking in silicon roadmaps years ahead rather than treating current AI demand as a temporary cycle.