Summary
Key takeaways
The Iran crisis reinforces a structural shift that we have been highlighting: geopolitics is becoming a recurring macro driver again. We are moving further into a “controlled disorder” environment, where shocks generate rotation and dispersion rather than a uniform market direction, as referenced in our latest Global Investment Views.
We see oil as the transmission channel to economy and markets. Current oil price level embed the shock. Without a Strait of Hormuz disruption, sustained oil prices above USD 100 are unlikely — and paradoxically, if prices reached those levels, demand destruction and recession risks would quickly cap the move. We read this primarily as a temporary stagflationary impulse, not a new oil super-cycle.
As long as oil flows continue, this remains a volatility event, not a systemic one — but it confirms that geopolitics is now structurally embedded in the investment cycle. In the short term, it feeds inflation risk, USD strength, and asset-class dispersion. Energy volatility, inflation uncertainty, and regional dispersion are returning as defining market features.
Asia and EM oil importers face tighter financial conditions and weaker external balances. Europe is more sensitive to gas due to lower storage levels but should normalize seasonally. The US remains relatively insulated, benefiting from its energy exporter status and safe-haven flows.
Investment implications: gold is the clear winner across scenarios while US assets should remain relatively resilient. EM will see winners and losers: oil importers are the most vulnerable, while commodity exporters could benefit. Credit risks are contained but skewed toward lower quality borrowers.
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