Oil prices have remained steady and below the $100 mark despite a significant escalation in geopolitical risks in the Middle East, particularly involving US-Iran tensions and threats over the Strait of Hormuz, according to Rabobank’s Global Strategist Michael Every [1]. Every notes that recent developments include the US expressing dissatisfaction with Iran talks, accusations of fabricated deal terms, and renewed US military strikes on Iran. Former President Trump stated that Iran and Oman would not control the Strait of Hormuz, threatened action against Oman if it 'misbehaves,' and emphasized that any deal would require regional participation in the Abraham Accords [1].
The European Central Bank (ECB) has issued warnings about a potential financial crisis linked to the impact of a possible Iran war, though no direct oil price targets were specified [1]. Additional geopolitical and economic developments include a 'plastic shock' affecting Asia, Central Asia's potential pivot to China over water security, and China-Cuba agricultural talks amid US pressure [1].
Danske Bank’s research team reports that global equities have paused and are set to open lower as oil prices and yields rebound following the renewed US-Iran tensions [2]. The team highlights that profit-taking in momentum stocks has occurred after strong gains, with consumer sectors and heavily shorted names outperforming in what is described as a catch-up move rather than a data-driven rotation [2]. The Korean Kospi index fell 3% in the morning, and US and European futures indicate a 0.5-1% decline as oil prices and yields retrace higher [2].
Danske Bank notes that the market had been pricing in a potential peace deal, but instead, the US carried out fresh strikes on Iran, contributing to the softer risk tone and equity pullback [2]. There was no macroeconomic data or earnings catalyst driving the shift; rather, it was attributed to profit-taking in recent winners and a catch-up move in lagging stocks [2].
CONCLUSION
Despite heightened geopolitical risks and renewed US-Iran tensions, oil prices have remained below $100, while global equities are experiencing a pullback as yields and oil prices rebound. The market reaction reflects increased caution, with profit-taking in momentum stocks and outperformance in consumer and shorted names. The situation remains fluid, with investors closely monitoring developments in the Middle East and their potential financial implications.