A major source of uncertainty stems from the Iranian blockade of the Strait of Hormuz. Roughly 20% of the world’s oil and gas supply passes through the strait. As such, a prolonged closure of the Strait of Hormuz could lead to a huge shortage of energy supplies. While some investors see parallels between today’s crisis and the Middle East oil shock in the 1970s, Hakan Kaya, a managing director and senior portfolio manager at the asset management firm Neuberger Berman, says today’s market turmoil is unprecedented.
It has been five weeks since the start of the joint US-Israel military strike on Iran and we are still not seeing any signs of the conflict abating. While President Donald Trump appears to be engaging in peace negotiations, Iran’s parliamentary speaker, Mohammad Bagher Ghalibaf, has accused Trump of rounding up US troops for a ground invasion. At this point, anything can happen.
The volatile state of affairs has turned the markets into a sea of red as investors struggle to make sense of the chaos. On the one hand, the S&P 500 is headed for its worst monthly performance since 2022, but on the other hand, there hasn’t been a rush toward safe-haven assets like gold, which has fallen below the US$5,000 ($6,440) level it was at earlier this year.
