Iran War Impact: Oil, Markets, and Policy
Geopolitical conflict in the Middle East caused market swings, oil price volatility ($119 to $88.57), and rising bond yields, challenging hopes for 2026 rate cuts.
The conflict's impact on oil is heavily influenced by the Strait of Hormuz, a critical route for approximately 20-25% of global oil and LNG shipments. Disruptions there could push Brent crude over $100 per barrel, with some analysts suggesting it could even test $200 if the Strait remains closed. Rising oil prices are stoking inflation fears, potentially delaying anticipated interest rate cuts and keeping government bond yields high. Markets are already pricing in the increased likelihood of interest rate hikes by the Bank of England. The situation remains fluid, with market volatility expected to persist. Some analysts believe the market is underestimating the potential duration of energy supply disruptions.
