By Anna Szymanski
March 6 –
Everything Mike Dolan and the ROI team are excited to read, watch and listen to over the weekend.
From the Editor
Hello Morning Bid readers!
The war in Iran could prove to be one of the most momentous geopolitical events in decades, with long-term ramifications for global alliances and energy markets. It also represents the biggest risk to global supply chains since the Covid-19 pandemic.
The joint U.S.-Israeli strikes on Iran that began last Saturday, killing Iranian Supreme Leader Ayatollah Ali Khamenei, were met with fierce retaliation by Tehran, which launched strikes across the region.
Yet as events unfolded this week, investors often appeared like the proverbial deer caught in the headlights. With some notable exceptions, mostly in Asia, prices in many asset classes moved far less than one would have expected – and sometimes in unexpected directions.
Today’s spike in energy prices may change that, however.
Major oil benchmarks are on pace for the largest weekly jumps since Russia’s invasion of Ukraine in 2022. Brent crude has topped $87 per barrel with WTI eclipsing $84, following big jumps on Friday morning. These represent increases of over 20% and 25%, respectively, on the week, and spikes of over 40% in the year to date.
The scale of the current disruption is enormous: the vital Strait of Hormuz has essentially been closed, hundreds of oil tankers are stranded, Qatar has shut its liquefied natural gas production, Saudi Arabia has suspended production at a key refinery and Iraq has shut its crude production.
One might have expected prices to already be closer to three digits. But this morning’s big moves suggest the market’s optimism about a quick resolution to the crisis is now being tested.
Certain regions are struggling more than others. Asian refineries that depend on the Middle East for nearly 60% of their crude supplies are struggling to find alternatives. Some plants have already reduced operations. Asian jet fuel prices skyrocketed over 70% on Wednesday, hitting a record high. European gas prices have also shot up.
(For a look at how the conflict is impacting various energy markets, check out ROI columnist Gavin Maguire’s chart-based overview.)
President Donald Trump’s response to the energy situation has been mixed. In reference to increasing gasoline prices, he said on Thursday, “They’ll drop very rapidly when this is over, and if they rise, they rise.”
Yet the U.S. is also now temporary loosening restrictions on Indian purchases of Russian oil to ease the squeeze on India’s refiners, and the U.S. Treasury also considered taking action in the oil futures markets to tamp down prices, though it has reportedly ruled that out for now.
Additionally, the president said earlier in the week that the U.S. would offer insurance coverage and navy escorts to help open the blocked Strait of Hormuz – but this plan is likely to be too little, too late.
The impact on other asset classes has been notably varied.
Asian stocks markets – home to many countries that import the majority of their energy from the Middle East – have been rocked. In particular, South Korea’s Kospi – one of the best-performing equity indices in the first two months of the year – was headed for its largest weekly fall in six years, around 10.5%.
European equities have also weakened since the conflict began, though far less significantly, and U.S. equities performed much better than their global peers, as the world’s biggest energy producer is well-insulated from shortage concerns and benefitted from a bounce in technology stocks.
The dollar, one of the bigger winners during the conflict, is on track to rise roughly 1.5% this week – and this may not be down entirely to safe haven demand.
Meanwhile, Treasury yields rose as fears about the potentially meaningful inflationary impact of an energy crisis offset investors’ flight to safety.
While gold prices were up on Friday, the supposed safe haven is actually down on the week. This could represent investors selling to cover losses in other areas but could also highlight the speculation that has helped fuel bullion’s massive runup in the past year.
Later today, markets may briefly turn their focus away from fear of war only to run back into the fear of a potential AI jobs apocalypse, with the release of U.S. February payrolls.
But all eyes will eventually return to the Middle East. No matter how – or when – this conflict ends, it has the potential to shift how the world thinks about defense, energy security, and resource nationalism. At a time when the AI revolution is demanding ever-greater amounts of energy, metals and minerals, that’s a huge deal.
For more stories on how the Middle East conflict may impact financial markets and commodities, check out Reuters Open Interest. You can learn:
As we head into the weekend, check out the ROI team’s recommendations for what you should read, listen to, and watch to stay informed and ready for the week ahead.
I’d love to hear from you, so please reach out to me at .
This weekend, we’re reading…
JAMIE MCGEEVER, ROI Markets Columnist: Evan Feigenbaum, at the Carnegie Endowment for International Peace, dissects China’s response – or, more accurately, non-response – to U.S. attacks on Venezuela and Iran, two of China’s supposed allies. Confirmation, as if any were needed, that Beijing Doesn’t Think Like Washington.
RON BOUSSO, ROI Energy Columnist: This excellent U.S. congressional report, drafted after last year’s 12-day Israel–Iran war, clearly lays out the history and strategic importance of the Strait of Hormuz.
ANDY HOME, ROI Metals Columnist: Amanda van Dyke, founder of the Critical Minerals Hub, offers insightful analysis of how the Iran war is burning through not only Western missile stockpiles but also the critical metals that make them function.
MIKE DOLAN, ROI Finance & Markets Columnist: This VoxEU column from the Centre for Economic Policy Research uses the 2021–2022 boom and bust of non-fungible tokens (NFTs) as an “unprecedented real-time laboratory for bubble economics.” The authors show how hard it is to measure or realize returns in illiquid markets for unique assets and how transaction prices can mislead, with clear lessons for regulators of digital and private assets.
GAVIN MAGUIRE, ROI Global Energy Transition Columnist: This excellent Reuters explainer summarises what’s in China’s latest five-year plan (2026–2030). Easy to miss amid the chaos surrounding the Iran war, the plan is likely to have a material impact on global markets and key technology trends for the rest of the 2020s.
We’re listening to…
CLYDE RUSSELL, ROI Asia Commodities and Energy Columnist: Gulf Intelligence’s Daily Energy Markets podcast provides essential context on the current Gulf oil situation and China’s decision to order its major refiners to suspend fuel imports.
And we’re watching…
ANNA SZYMANSKI, ROI Editor-in-Charge: The Morning Bid podcast – where you can catch Mike Dolan five days a week – is now available on YouTube. Check out the Sunday edition each week where I join Mike to discuss what’s in store for the week ahead in markets.
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Opinions expressed are those of the authors. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Anna Szymanski)
