Global financial markets are reacting to the escalating conflict between the U.S. And Iran, with oil prices surging and investors seeking safe-haven assets. The situation is prompting concerns about a potential inflationary shock, according to a new report from Macquarie.
Analysts at Macquarie warn that the war is acting as a significant negative supply shock, driving up the price of Brent crude by more than 7% and increasing gold prices by 2.0% in early trading on Monday as investors move away from riskier financial assets toward “tangible assets.” This shift reflects a broader flight to safety amid geopolitical uncertainty.
The impact is already being felt in global stock markets, with major European indices falling by more than 2.0% on average. U.S. Index futures also opened lower, declining by over 1% as traders assess the potential duration of the hostilities. The immediate market reaction underscores the sensitivity of global economies to disruptions in the Middle East.
Macquarie strategists Thierry Wizman and Gareth Berry suggest that even without physical destruction of production capacity, “hoarding” and soaring insurance premiums – already up 25% to 100% for passage through the Strait of Ormuz – are fueling a powerful inflationary cycle. The Strait of Ormuz is a critical chokepoint for global oil supply, and increased transit costs contribute directly to higher energy prices.
The report highlights a diverging economic outlook for oil-importing versus oil-exporting nations. Historically, supply-driven oil spikes have triggered sharp and persistent job losses, particularly in countries like Japan, China, and throughout Europe, which are heavily reliant on supplies from the Persian Gulf. This divergence could lead to uneven economic performance globally.
