By Benjamin Picton, senior market strategist at Rabobank

Wednesday saw the unusual occurrence of three Anglosphere heads of government delivering televised addresses to their respective nations within 24 hours of each other. When news broke that Australia’s PM Albanese, Britain’s PM Starmer and US President Trump would all be interrupting regular programming to speak to their people, reactions ranged from jubilant speculation that the war is about to end all the way through to nervousness that Operation Iranian Freedom was about to be announced.

Judging by the price action in markets, the latter was certainly seen as the less likely of the two as stocks rose sharply across Asia, EMEA and the Americas, while Brent crude briefly dipped below the $100/bbl mark. Singapore gasoil spot prices fell by 22.7% - it’s largest daily move (up or down) of the war so far.

Those moves are now revealed as an April Fool’s rally as Donald Trump’s address to the nation has sent oil bid, bond yields surging, high-beta FX lower and early rallies in Asian stocks have now turned deeply negative. Trump declined to announce that the USA is packing up and going home, instead declaring that “we are going to finish the job.” He said that the US owed it to 13 soldiers who have died in the conflict to complete the mission by ensuring that Iran would not have the capability to obtain a nuclear weapon, that it would no longer have the ability to project power beyond its borders, and by severely degrading its drone and missile stocks and the industrial base used to produce those conventional weapons.

Trump says there is still time for Iran to make a deal to end the war but that the US is willing to leave without a deal and will eliminate key targets on their way out, pointing specifically to Iran’s electricity plants. He reiterated his previously expressed timeline of 2-3 weeks to conclude operations in Iran, but markets will be nervous about that as those timelines have a tendency to stretch.

Critically, Trump also seemed to confirm rumors that the US is willing to leave without first securing freedom of navigation in the Strait of Hormuz, instead leaving that task to other countries (though he says the US will help) on the justification that they are far more reliant on Persian Gulf oil than the US is. Trump said that the Strait will ultimately re-open naturally when the war concludes as Iran will rely on oil sales to rebuild, but in the meantime he advises other countries to buy their oil and gas from the United States.

The market optimism of the last 24 hours was always likely to be misplaced. The subtext of Trump’s remarks is that NATO and the GCC states must get involved in the war to re-open the Strait, or else suffer the consequences of US withdrawal for the world economy. Some – like the UAE – have expressed willingness, but most have not. If nobody steps up the war may grind on for longer (bad), escalate (worse), or the US may simply leave with Hormuz unresolved (worst). While the latter is a clear and present danger for world hydrocarbon markets and civilisation in general, it would also be a heavy blow for US hegemony and reserve currency status as American tactical victories sum to strategic defeat and Iran continues to operate the Strait as a toll road settled in CNY.

Hours before Trump’s address, Australian viewers were left somewhat nonplussed by their Prime Minister’s primetime appearance. Given that Prime Ministerial addresses to the nation are incredibly rare, Australians were perhaps bracing for some grave Menzian announcement (“My fellow Australians. It is my melancholy duty to inform you...”) but were instead wished a happy Easter holiday period, warned that the months ahead may be hard and told to conserve fuel by taking public transport and resisting the urge to stockpile. Some commentators have cheekily observed that this one could have been an email, but in the aftermath of Trump’s address Albanese’s well wishes for the Easter holidays are feeling a bit more like the last supper as speculation mounts that Australia could be headed for fuel rationing as early as next week.

Keir Starmer struck a slightly different tone to his antipodean counterpart by focusing more directly on Britain’s efforts to re-establish freedom of navigation in the Strait of Hormuz. Starmer noted that he had convened captains of industry from the shipping, finance and insurance sectors earlier in the week at Downing Street, and that they had told him the issue in Hormuz is not one of insurance, but of safety and security of passage. Starmer says that foreign ministers of 35 nations will meet later this week to explore diplomatic and political avenues to end the war and re-open the Strait, to be followed by a meeting of military leaders.

Starmer was at pains to reiterate his message that this was not Britain’s war. The PM is currently between a rock and a hard place because involvement in the war upsets anti-war constituencies at home and draws the ire of the Iranian regime, while not becoming involved draws the ire of the US President. It is becoming very difficult to straddle these two imperatives as Trump tells NATO allies “I broke it, you bought it.”

As a consequence of being faced with only bad choices, Britain has had a muddled approach of refusing US access to bases and then granting it, delaying deployment of HMS Dragon to the Eastern Mediterranean and then deploying it, and refusing requests to assist with naval escorts in the Strait - but is surely now forced to consider it. Combining this indecision with Spanish, French and Italian refusals to allow US access to bases, and suggestions that the war runs contrary to international law, the European relationship with the USA suddenly looks more strained than ever.

This has severe implications for NATO, which Keir Starmer noted that Britain remains committed to, but Donald Trump and Marco Rubio have recently said the US may consider withdrawing from. This in turn has implications for the flow of US aid to Ukraine, where the United States may tell the EU “your problem now”, and also for the status of Greenland. Denmark and the EU were able to defuse Trump’s assertive stance on controlling Greenland last year by providing assurances that the US would have access to bases as it needs, but now that it has been refused access to bases in Europe for the Iran war, everything is back on the table.

There is a reshuffling of strategic dependencies now occurring in real time. Starmer used his address to tell his people that Brexit had done deep damage to the British economy, and that Britain now had to draw closer to the EU to strengthen its economic and security relationships in its immediate geography. The subtext here is that Britain will pivot to the EU from the US, which puts the ‘Special Relationship’ on life support alongside NATO.

This has implications elsewhere, especially in Australia where plans to acquire nuclear-propelled submarines rely on cooperation with and between Britain and the United States. As many Australian defence commentators have argued in the recent past, there is no Plan B if AUKUS falls apart, and Australia is already faced with a submarine capability gap as it’s 1990s-era Collins class submarines are looking very long in the tooth.

Given its own geography, and the fact that it is so far down the AUKUS road, Australia may have no choice but to stick by the USA while other allies coalesce around Europe or chase Mark Carney’s ‘variable geometry’ system of alliances down the path of incongruent current accounts. Might we see an Australian Hobart class in the vanguard to answer Trump’s call to re-open the Strait?