The US/Israel attack on Iran and the closure of the Strait of Hormuz have forced a rapid reassessment of Middle East risk across commodities, currencies, credit markets and emerging market inflation Brent crude was trading at $76 a barrel on Monday. Citi's commodities team now sees it pushing into the low to mid-$80s as an initial reaction to the weekend's strikes, with Iranian exports curtailed for at least the duration of the conflict and potentially longer, depending on what Tehran's interim leadership decides to do next.
Brent faces fresh upside risk as Hormuz flows stall, tanker traffic drops and Iran succession uncertainty reshapes the outlook for global oil supply.
20%. That's how much of the world's supply of oil flows through the Strait of Hormuz, where tanker traffic has been effectively shut down due to the conflict.
Lori Calvasina, Head of US Equity Strategy at RBC Capital Markets, discusses elevated geopolitical uncertainty and its impact on the markets. Wall Street's worries about an inflation resurgence sent bonds slumping as oil surged amid an escalating war in the Middle East, with traders trimming bets on rate cuts.
Rising U.S.-Iran tensions lifted oil risks and defense outlook, positioning energy, shipping, cybersecurity and metals ETFs for potential gains.
There isn't enough cushion in the system to absorb big oil disruptions.
Strikes from U.S. and Israel killed Iran's Supreme Leader and other top members of its leadership. Stock futures fell while crude oil spiked 8% higher.
Oil spikes on Middle East tensions. Energy & shipping ETFs may rally, while airlines, retail and refiners could face pressure.
Brent Crude ETF BNO hits a 52-week high as rising oil prices and Middle East tensions boost momentum, signaling potential near-term upside.
History shows market can recover quite quickly from geopolitical shocks
The question is how high could oil prices go in the case of a sustained conflict.
Renewed conflict in the Middle East poses a fresh headache for Asia's central banks, reviving inflation risks just as price pressures had steadied across much of the region.