Escalating Israel-Iran conflict could disrupt oil trade and shake markets, analysts say
Surging uncertainty in the Middle East has clouded the outlook for global markets, with analysts warning that a potential shutdown of the Strait of Hormuz could send crude prices higher, intensify US inflation and complicate the Federal Reserve’s rate-cut plans.
Gold stands to benefit more directly from geopolitical shocks, while Chinese assets could remain relatively shielded, they added.
“Looking ahead, we cannot rule out a rise and recurrence of risk aversion,” the China International Capital Corporation said in a note on Monday, adding that markets may struggle to gauge the potential for escalation in the early stages of the conflict.
“In the short term, as the parties engage in retaliatory strikes and exchange strong rhetoric, risk premiums are likely to be pushed higher.”
