Energy Shock and Inflation Spiral

It's as close as a tanker transit fee. Every tension in the Strait of Hormuz directly impacts the world's largest economies. The conflict in the Middle East is not just a regional problem; it has become the epicenter of global inflation, interest rate decisions, and investment psychology.

🔹 Oil Fire Heats Up the Economy
The US-Iran conflict has threatened global oil supply since February. Brent oil surged above $96, while WTI reached $92. Thanks to the 14-point Memorandum of Understanding and ceasefire signed by both countries in Switzerland, the Strait of Hormuz was reopened. Transit fees were eliminated. However, the cost of the three-month supply disruption is already being felt: wholesale prices for diesel and jet fuel have increased by over 60% in 2026.

🔹 Immediate Impact on Transportation and Shelf Prices
The increase in fuel costs has poisoned the entire supply chain, from factory to market. Transportation costs have skyrocketed. Food prices have risen. In the US, May CPI reached a three-year high of 4.2%. The Federal Reserve was forced to keep its policy interest rate stable between 3.5% and 3.75%. Moreover, 9 out of 18 members expect an interest rate hike by the end of the year. The era of cheap money is over.

🔹 Gold and Safe Haven Psychology
Gold, which soared to record levels due to fears of war, experienced its biggest weekly drop since 1983 with the signing of the ceasefire. XAUT underwent a sharp correction. The geopolitical risk premium evaporated. Peace is good for growth but devastating for fear-based assets. Silver shared a similar fate, but industrial demand (solar energy, electric vehicles) kept the price at the $62 level.

🔹 Erosion of Confidence in Investor Psychology
As individual investors lost purchasing power in the face of inflation, they turned to crypto and commodities to protect their savings. Institutional investors did the opposite: a record amount of outflows ($6.35 billion) occurred from Bitcoin ETFs. Uncertainty has made holding cash and chasing liquidity a priority. The Crypto Fear and Greed Index remained in the "Extreme Fear" zone for an extended period.

🔹 The Middle East Determines Fate
While tensions continue in Lebanon, the Israeli-Palestinian issue remains on the table. If the ceasefire is permanent, energy and commodity prices will fall, inflation will decrease, and central banks will be relieved. If the ceasefire breaks down, oil prices will skyrocket again, costs will explode, and recession will be at the door.

The price at the oil pump has become the price tag in the market. Every bullet fired in the Middle East determines the risk appetite in individual portfolios. The global economy is trying to breathe in the shadow of diplomacy.

So, do you think this ceasefire will be permanent, or should we start pricing in geopolitical risks again?
⚠️ Not financial advice.
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