US-Iran military strikes have brought Hormuz oil passage to a near halt, sending Brent crude up 9% and triggering a flight to safety that lifted gold and bonds while sinking global equity futures on supply disruption fears.
US-Iran strikes have erupted around the Strait of Hormuz, halting tanker traffic and threatening 20% of global seaborne oil supply. Brent crude jumped over 9% to above $85 as traders priced in a prolonged supply disruption.
Analysts suggest $100/barrel if the strait remains blocked for over a week, given the loss of 20% of global seaborne supply.
Immediate resistance sits at $85, the spike high; support at $78, the pre-attack level. A break above $85 could target $90.
S&P 500 futures tumbled over 2.5% as the Hormuz crisis stoked fears of higher energy costs, supply-chain disruptions, and a potential global economic slowdown. The spike in oil threatens corporate margins and consumer spending.
Futures fell 2.5%, reflecting fears that higher oil costs will squeeze corporate profits and dampen consumer demand, reminiscent of past supply shocks.
Airlines, transports, and consumer discretionary stocks face the greatest headwinds from rising fuel costs, while energy stocks are likely to outperform.
WTI crude mirrored Brent's spike, surging 8% to $80 as the Hormuz disruption pressured all crude benchmarks. The US benchmark is not directly exposed to Hormuz but follows global supply fears.
WTI is up 8% versus Brent's 9%, reflecting a slightly lower sensitivity to Hormuz disruptions since US production is landlocked, but both benchmarks are moving in tandem.
Resistance at $80, the current spike high, with next target at $85 if broken. Support at $74, the pre-conflict level.
Gold rallied 2% to $2,250 as the Hormuz crisis triggered a flight to safety, with investors seeking refuge from supply-shock-driven equity losses. Rising geopolitical tension and potential inflation added to the bid.
Historically, gold tends to spike on sudden geopolitical shocks but may retrace if tensions ease. The current spike is driven by the immediate threat to oil supply, which adds an inflation dimension.
Gold broke above $2,200 resistance and is now targeting $2,300. Support is at $2,180, the pre-conflict level.
U.S. 10-year yields fell 6 basis points to 4.25% as investors sought the safety of government bonds amid the supply-shock-driven risk-off move. Lower yields reflect a bid for Treasuries.
Investors are rushing to the safety of US government bonds, pushing prices up and yields down, as the Hormuz crisis raises fears of slower global growth.
The market is pricing in a 50% chance of a Fed rate cut later this year if the disruption persists, which could drive the 10-year yield toward 4.00%.
The dollar index rose 0.5% to 98.50 as global risk aversion prompted a bid for the US currency, despite the inflationary implications of higher oil. Safe-haven flows dominated in the initial shock.
In risk-off episodes, the dollar tends to benefit from safe-haven demand, but a sustained oil shock could later harm the US economy and weaken the dollar.
DXY faces resistance at 98.80, with the next target at 99.50. Support has moved up to 98.00.
Shipping traffic through the Strait of Hormuz came to a near standstill after US and Iranian forces exchanged strikes, choking off a fifth of global oil supply. Brent crude surged 9% to above $85 a barrel as traders priced in prolonged disruption risks. Safe-haven assets rallied, with gold up 2% and Treasury yields dropping 6 basis points, while equity futures pointed to sharp losses on supply-shock fears.
The halt was triggered by military strikes between US and Iranian forces in the region, prompting insurers to declare it a war-risk zone and effectively suspending commercial tanker operations.
Approximately 20 million barrels per day, or about 20% of the global seaborne crude oil transit, passes through the strait, making any disruption a major event for energy markets.
Analysts fear that a prolonged closure could push oil prices above $100/barrel, intensifying inflationary pressures, slowing global growth, and potentially triggering a recession especially in import-dependent economies.