"The price of Brent crude surged to a high of $115/bbl early in the week, before falling back to $85 and then moving back up to its current level of $105. This compares with around $70 before the crisis erupted and the high of $120-130 seen in 2022."
"Market moves are being dictated by the rapid shifts in expectations over how long the war will last and more importantly how long the Strait of Hormuz will stay closed. Trump's comments about the aims and likely duration of the war change on a daily basis and have been a major factor here."
"The apparent ability of Iran to continue attacking shipping via drones and potentially mines, even if its missile capabilities have been severely degraded, is behind this shift. The belief has generally grown that the Strait could remain closed for a month or two, more than was thought initially, with a significant risk that it could remain blocked for longer still."
Oil prices experienced significant volatility following Iran-related developments, with Brent crude fluctuating between $85 and $115 per barrel, compared to pre-crisis levels around $70. Global equities declined 0.9% in local currency terms, with China and the UK performing relatively better while Japan and emerging markets suffered larger losses. Energy stocks remained the only sector posting gains. Bond yields rose 0.1-0.2% as rate cut expectations diminished in the US while rate increase concerns grew in the UK and Europe. Gold fell approximately 2% to $5,000 per ounce. Market volatility stems from uncertainty regarding war duration and potential Strait of Hormuz closure, with growing expectations it could remain blocked for one to two months or longer, driven by Iran's continued drone and mine capabilities despite degraded missile systems.
Read at London Business News | Londonlovesbusiness.com
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