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Fast reading
- Attacks on tankers in the Strait of Hormuz have heightened concerns that a key global trading route will remain shut.
- The price of a barrel of Brent crude soared above US$100 this week amid volatile trading.
- In a bid to stabilise markets, IEA member countries released 400 million barrels of emergency oil reserves this week.
Oil markets have remained highly volatile this week as geopolitical tensions continued to disrupt global supply chains and raise concerns about energy security.
Attacks on tankers in and around the Strait of Hormuz have heightened concerns that a key global trading route will remain shut. The price of a barrel of Brent crude soared above US$100 this week amid volatile trading1.
The pan-European Stoxx 600 Index dropped 1.2% over the three days to close Thursday, while Dubai’s benchmark DFM General Index fell 2.7% over the same period as the city struggled under attacks from Iran2 .
In a bid to stabilise markets and counterbalance supply constraints, International Energy Agency (IEA) member countries agreed on Wednesday to release 400 million barrels of emergency oil reserves – the largest coordinated release in history3. The US also announced it would release 172 million barrels from its strategic reserve.
The Strait of Hormuz carries approximately 25% of the world’s oil shipments, according to the IEA4. The Middle East is home to a number of the world’s largest oil producing countries including Saudi Arabia, Iran and Iraq (Figure 1).
Figure 1: Middle East oil output (barrel/day)
The wider implications
Many investors will be wondering whether oil prices will continue to rise and impact inflation and global growth, says Lewis Grant, Senior Portfolio Manager for Global Equities at Federated Hermes. “Investors appear to be pricing in a return to a more normal environment sooner rather than later which explains – at least partially – why the share prices of many energy companies have not mirrored the moves in the oil price,” he says.
The long-term consequences of previous Middle Eastern conflicts have been difficult to predict, Grant adds. “These military incursions typically leave long-lasting [economic] wounds which do not heal simply because the world’s attention moves elsewhere.”
When doves cry
The sudden onset of the Iran conflict has pushed back expectations for rate cuts this year, says Mitch Reznick, Group Head of Fixed Income – London at Federated Hermes.
Genuine concerns and uncertainty about the impact of the war – being digested in real time – is putting pressure on credit spreads
“The market was pricing in a 90% chance of a March rate cut by the Fed at the end of February before the attacks on Iran; the risk of higher rates lifts discount rates and sends risk premia higher. This, combined with genuine concerns and uncertainty about the impact of the war – being digested in real time – is putting pressure on credit spreads.”
Reznick adds that prior to the conflict, spreads were extremely tight – at near historic levels – and that “nothing of this scale was priced in”.
“The move in spreads is material in the context of months if not years of low spread volatility, but it does seem sensible, contained and orderly,” he adds.
1 Bloomberg, as at 12 March 2026.
2 Ibid
3 The Financial Times, as at 11 March 2026.
4 Strait of Hormuz – Oil security and emergency response – IEA
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