Crude oil prices surge, tensions between Israel and Iran affect the global economy!

Although major US stock indexes such as the S&P 500 did not fluctuate significantly, the uncertainty in the capital market increased significantly after US President Trump announced air strikes on three Iranian nuclear facilities on the 21st. Investors can only wait anxiously for possible market changes after the opening of Monday.

The tensions between Israel and Iran affect the global economy, and the uncertainty in crude oil, shipping and capital markets continues to increase. Data shows that crude oil prices in the United States have risen by about 10% in the past week. Brent crude oil futures prices have risen by 18% since June 10 and hit a nearly five-month high of $79.04 per barrel last Thursday. At the same time, due to concerns about the risks of navigation in the Strait of Hormuz, the price of leasing large tankers crossing the strait has more than doubled. Statistics from Clarksons Research from the 12th to the 19th show that the rental price of a supertanker that can carry 2 million barrels of oil from the Persian Gulf to China has soared from less than $20,000 per day to nearly $48,000.

JPMorgan Chase recently released a research report saying that if the situation in Israel and Iran leads to the blockade of the Strait of Hormuz, international oil prices may rise further, even breaking through $100 per barrel. Oxford University research report believes that in the worst case, global oil prices may soar to around $130 per barrel. 30% of the world's seaborne crude oil and 20% of liquefied natural gas supply pass through the Strait of Hormuz, a key waterway. JPMorgan Chase believes that if the waterway is blocked, different regions in the world will be affected to different degrees. Overall, since most of the crude oil exports in the Gulf region are destined for the Asian market, Asia may be more affected. Among them, India and Indonesia, which are highly dependent on Middle Eastern crude oil imports, will be more affected.

Europe has recently increased its efforts to import liquefied natural gas from the United States, and its dependence on the Middle East has decreased. However, the Financial Times of the United Kingdom cited Argus market price data and reported that since the outbreak of the latest round of the Israeli-Iranian conflict, the premium of European diesel over crude oil has soared by 60%, and the premium of aviation fuel has also risen by 45%, both reaching a 15-month high.

As a net energy exporter, the United States may be relatively less affected. But the United States is currently facing the pressure of economic slowdown and rising inflation. JPMorgan Chase estimates that for every $10 increase in oil prices, the US inflation pressure will increase by 0.3%-0.4%.

The abnormal movement of various assets in the capital market has attracted much attention. The US "Fortune" magazine reported on the 21st that the international gold price may rise to $4,000 per ounce next year, an increase of 18% over the current gold price. However, since the outbreak of the new round of Israeli-Iranian conflict, the international gold price has not risen, but has fallen by 2%. Bank of America analysts said last Friday that gold is often regarded as an important safe-haven asset in the context of global turmoil, but war and geopolitical conflicts will not necessarily be the main driving force for the long-term rise in gold prices. The impact of the US government deficit may be greater.

Data shows that since the end of March this year, central banks have sold a total of $48 billion in U.S. debt. The high U.S. government deficit and the unsustainability of issuing U.S. debt to fill the government's fiscal hole are causing increasing concerns. Analysts believe that central banks are shifting their buying focus to gold rather than U.S. debt, and it is estimated that gold currently accounts for only 3.5% of central bank reserves.

Hours before Trump announced the strike on Iran's nuclear facilities, Reuters analyzed the worst economic scenario that the situation between Israel and Iran could bring. The report said that if the situation worsens, U.S. inflation may rise further, consumer confidence will decline, and the possibility of a Fed rate cut in the near future will become smaller. Affected by the tensions between Israel and Iran and the market's concerns about the Trump administration's tariff policy, U.S. stock funds suffered the largest weekly outflow of funds in three months last week, with a net outflow of $18.43 billion.

The impact of the tensions between Israel and Iran on the trend of the U.S. dollar will be more complicated. Since the beginning of this year, the U.S. dollar index has continued to fall under the cloud of tariff uncertainty. Analysts at Macquarie Group believe that if the United States directly intervenes in the Israeli-Iran conflict, the US dollar may receive short-term support due to safe-haven demand, but in the long run, the status of the US dollar may be weakened. For example, the US dollar weakened during the long-term US military presence in Afghanistan and Iraq.