Jahangir Aziz, co-head of economic research at JP Morgan (JPM), frames the issue as less about the headlines and more about the transmission mechanism. “Clearly, the link is oil and what happens to oil prices,” he says in a media briefing on macro trends on March 3. “There is a lot of uncertainty surrounding it.”
Uncertainty is back at the centre of markets as the US-Israel war with Iran escalates, with early air strikes reigniting fears of a wider regional conflict that could impact global growth via higher energy costs. Unsurprisingly, the market’s knee-jerk reaction was a rush into safety assets, such as gold, as well as a jump in oil that traders are watching for signs of a sustained supply shock.
Many investors’ immediate question is whether the move is a short-lived risk premium or the start of a sustained energy shock that bleeds into inflation and growth.
