Tariffs + Middle East crisis—does the oil price surge rekindle inflation risks?

Global markets are re-pricing a key keyword:

Inflation.

Previously, investors’ biggest expectations were:

Interest-rate cuts.

Liquidity release.

Risk assets continuing to rise.

But the past two variables are changing market expectations:

Trump’s tariff policy escalation.

Rising tensions in the Middle East, with increased Iran risk.

Together, they drive volatility in energy markets—and also make the market worry again:

Could rising oil prices become the spark for the next round of inflation pressure?

Why does a rise in oil prices affect global assets?

Many people think:

A rise in oil prices is only an issue for the energy market.

But in reality, crude oil is the “core cost driver” of the global economy.

From transportation.

To manufacturing.

To the production of consumer goods.

Nearly all industries are affected.

If oil prices keep rising:

Business costs increase.

Commodity prices rise.

Consumer pressure grows.

And ultimately, it may filter through into inflation data.

The Iran factor: the market worries about energy supply risks

The Middle East is the most sensitive region for global energy markets.

Especially any shifts related to Iran can directly affect market expectations for crude oil supply.

What the market trades isn’t necessarily:

How much oil supply gets reduced today.

But rather:

Whether there will be uncertainty in future supply.

What financial markets fear most is:

Uncertainty.

So once geopolitical risk heats up, capital typically reacts in advance.

Trump’s tariff policy: could bring a second round of inflation pressure

Tariffs are essentially a form of cost transfer.

When the cost of imported goods increases:

Companies may choose to absorb part of the costs.

Or they may raise prices.

Ultimately, it affects consumers.

This is also what the market is worried about:

If tariffs lead to higher prices for goods,

then the inflation trend that had been falling could see a reversal.

Pressure on the Federal Reserve increases

The question the market is most focused on now:

It’s not whether the Fed wants to cut rates.

It’s whether inflation will allow it to cut rates.

If going forward we see:

Oil prices rise.

Commodity prices rebound.

Inflation data bounce back.

Then the Fed may keep rates higher for longer.

Or even delay the timing of rate cuts.

Which assets could be affected?

1. Gold

Gold may attract safe-haven demand.

Because:

Geopolitical risks.

Inflation worries.

Currency credit stress.

All increase gold’s appeal.

But in the short term, the dollar’s direction still matters.

If the dollar rises on safe-haven demand, gold could see choppy price action.

2. US tech stocks

The biggest problem for tech stocks is:

High valuations.

If the market re-prices:

Higher interest rates.

Inflation.

A stronger dollar.

Then pressure on growth stocks will increase.

Especially AI sectors that rely on future earnings expectations.

3. Energy sector

A rise in oil prices usually benefits energy companies.

Especially:

Oil producers.

Energy services companies.

But if oil prices cause the economy to slow down, new market contradictions may also emerge.

Now, the real market battle

It’s not:

Whether oil prices will rise or not.

It’s whether an increase in oil prices will change the Fed’s policy path.

If it’s only a short-term supply concern:

The market may digest it quickly.

But if it evolves into:

Energy prices rising + inflation rebounding + rate cuts delayed.

Then global assets may face a fresh repricing.

My view:

The market is currently switching from “a rate-cut trade” to “a trade focused on inflation risks.”

In the coming weeks, you need to focus on:

Oil price trends.

US inflation data.

US Treasury yields.

US dollar index.

These four indicators will determine the next phase direction for risk assets.

What the market fears most isn’t oil prices rising, but oil prices rising that re-ignites inflation. If energy becomes a new driver of inflation, expectations for Fed rate cuts may be pushed back again, and global assets will face another round of repricing.
#布伦特原油重返100美元 #关税 $XTIUSD ‌