The Danske Research Team highlights that the ongoing US–Iran conflict and the associated risks of closure in the Strait of Hormuz are significantly impacting global energy markets [1]. Since the onset of hostilities, US gasoline prices have surged nearly 50%, reaching an average of USD 4.45 per gallon as of Sunday, according to AAA data [1]. This sharp increase in oil prices is exerting upward pressure on global bond yields and inflation expectations [1].
The situation escalated as Donald Trump announced 'Project Freedom,' a plan to guide ships through the Strait of Hormuz starting Monday. This move was strongly criticized by Iran, which labeled it a violation of the ceasefire and dismissed US claims of positive discussions [1]. Regional instability is further underscored by Israeli evacuation orders in southern Lebanon, and despite a temporary pause in US-Israeli bombing, the conflict continues to disrupt energy markets and fuel inflation risks [1].
Danske Bank warns that the ongoing uncertainty surrounding the war and the potential closure of the Strait of Hormuz remain central to energy market repricing. The bank notes that while there is downside risk from the conflict in the Middle East, there is also potential upside risk in equities due to strong earnings momentum [1].
CONCLUSION
The US–Iran conflict and heightened tensions around the Strait of Hormuz have led to a sharp rise in oil and gasoline prices, increasing inflation risks and pressuring global bond yields. Danske Bank emphasizes that ongoing regional instability will likely continue to disrupt energy markets, with both downside risks from the conflict and potential upside for equities due to strong earnings.