USA vs. Iran. Oil and Gold
When the US and Israel strike Iran, and Tehran retaliates against Israeli territory, American bases in the region, and Persian Gulf infrastructure, the market immediately shifts to a war risk mode. This is no longer a diplomatic process or a limited operation. This is an event that potentially changes the balance across the entire region.
The key factor is the Strait of Hormuz. Approximately 20 million barrels of oil per day pass through it, accounting for about a fifth of global consumption, as well as over 100 billion cubic meters of LNG annually. Even a partial disruption of this route means a supply shock of global magnitude. The market does not wait for an actual closure. It is already hedging the risk.
On Friday, USOIL closed near 67.2. Gold held around 5.27 thousand per ounce. At the beginning of the week, the logic is simple: a gap up in oil, a gap up in XAU. A move above 70 for oil is a basic reaction to the repricing of supply risk. Renewing historical highs for gold is a classic safe-haven scenario.
Market scenarios can be broadly reduced to two. The first is a rapid escalation phase, a few days of intense strikes, followed by a reduction in operational tempo. In this case, the oil spike might partially subside, and the risk premium could gradually contract. This would be a short repricing without a long-term macro effect.
The second scenario is a protracted conflict with asymmetric Iranian retaliation, attacks on shipping, activation of proxy groups, and a constant threat to Hormuz. Even a partial disruption of a route through which 15-20% of global supply passes is historically comparable to the largest energy shocks. For reference: at the beginning of Russia's war against Ukraine, 7-8% of the world's oil was at risk, and Brent then approached $140. The scale of potential risk in the Persian Gulf is larger.
However, there is a difference from 2022. Oil inventories in OECD countries are currently approximately 200 million barrels higher than before Russia's invasion of Ukraine. This creates a temporary buffer. But a complete closure of Hormuz, even for two weeks, would practically deplete this reserve. The market understands this.
The gas component is no less important. Up to 125 billion cubic meters of LNG are at risk – about 22% of global LNG trade. Europe is no longer dependent on a single supplier, as in 2021, but still imports a significant portion of its energy. A new energy shock on top of tariff pressure is a blow at the worst moment for recovery.
For the US, the effect is ambivalent. The country is a major oil producer, so the sector benefits from high prices. But the consumer loses out. Gasoline is a politically sensitive commodity. In parallel, the Fed faces a difficult dilemma: a new inflationary impulse due to energy against a backdrop of not yet fully extinguished tariff pressure complicates a rapid rate cut.
For the Eurozone, the consequences are sharper. High energy prices mean pressure on inflation and a simultaneous deterioration in growth. According to ECB estimates, a 14% rise in oil prices could add about 0.5 percentage points to inflation and reduce GDP by approximately 0.1 percentage points. And this is without considering logistical disruptions. If prices remain high for longer, the central banks' dilemma becomes more real: inflation versus growth.
Asia is vulnerable due to its dependence on energy imports. Japan and the Philippines get up to 90% of their oil from the Persian Gulf region. China and India — 38% and 46% respectively. Even without a physical shortage, rising prices worsen trade balances. A 10% increase in oil prices can worsen the current account by 40-60 basis points in the most dependent economies. The inflationary effect is also quick: on average +0.2 percentage points to CPI for every 10% increase in oil.
Financial markets react predictably in such an environment. In the first phase — falling UST and Bund yields, rising gold, strengthening dollar. If oil prices remain high, the inflationary factor begins to dominate, and safe bonds no longer seem so protected.
In the currency space, a repeat of the 2022 model is possible. At that time, the trade-weighted dollar rose by more than 10% in six months while energy prices remained high. Energy-importing countries weakened against the USD. In the event of prolonged escalation, the euro and yen may be under pressure, while the dollar will receive support due to energy independence and reserve currency status.
What is happening now is not just a spike. It is a phase of global repricing. The market is simultaneously recalculating supply risk, inflationary expectations, the trajectory of interest rates, and the structure of capital flows. The correction of the dollar's bearish range in 2025 may change character if the energy risk takes hold.
Under such conditions, oil becomes an indicator of geopolitics, gold an indicator of fear and inflation, and the dollar an indicator of liquidity. And as long as the risk in Hormuz is not removed, this market profile will remain dominant.