- Iran closes Strait of Hormuz over the weekend
- US seizes Iranian-flagged vessels by force in Gulf
- Oil benchmarks surge on renewed geopolitical risk
- Equity markets flash red on risk aversion
Here we go again…
Over the weekend, Iran closed the Strait of Hormuz again in response to the US maintaining its blockade.
This chaotic development resulted in Iran rejecting the second round of talks with Trump, who threatened to “knock out” all Iranian power plants.
Note: Second round of peace talks is scheduled to take place on Tuesday.
Things worsened after the US seized Iranian-flagged vessels by force in the Gulf, essentially jeopardizing talks to end the war.
Soaring tensions over this critical chokepoint threaten to deepen the energy crisis already rocking the global economy.
And such was reflected on Sunday when markets opened with sharp gaps from Friday’s close.
- WTI: ↑ 9%
- BRENT: ↑ 8%
- USDInd: ↑ 0.3%
- XAUUSD: ↓ 1.5%
Note: Performance shown represents the gap from Friday’s close.
What next?
Uncertainty is set to remain the name of the game as markets tread carefully amid the deepening conflict.
This is likely to weigh on global equities while prompting investors to seek safe-haven destinations.
Nevertheless, market sensitivity to developments in the Middle East could trigger extreme price swings in either direction.
So, any whiff of US-Iran peace talks resuming may bring equity bulls back into the game.