For respective weeks now, planet markets have been looking at events around Iran. US forces have accumulated in the region – further ships, including USS aircraft carrier Abraham Lincoln, are heading for the Persian Gulf, and the Pentagon temporarily relocates part of military personnel from the mediate East to Europe and the United States.
Such movements, although officially described by Donald Trump's administration as precautions, evoke the spectrum of a possible conflict that could turn into an extended military operation. The hazard is so advanced that Prime Minister Donald Tusk has already called on Poles in Iran to leave him "immediately". “Please (...) do not go to this country,” he added.
Trump announced on Thursday that "the planet will learn in the next 10 days" whether the US will scope an agreement with Iran or take force action against the government in Tehran. Parallel Iranian authorities strengthen their defence, and the ultimate leader of Ayatollah Ali Chamenei calls for readiness to retaliate.
The hazard of war in Iran hangs over the stock exchanges. Oil costs more
Such geopolitical background is immediately reflected in investor sentiments and key asset valuations. The increasing distance to risky asset classes and the strengthening of the dollar, which remains a safe haven in times of uncertainty, is only part of the marketplace response.
According to Erik Szmyd, XTB's financial marketplace analyst, "a costly dollar and oil – 2 sold-out assets have clearly returned to the bellows of bulls (investors oriented to the price increases of a given asset – ed.)and spoil sentiments in global markets". Although the declines in the main indices are presently small, the observed trend underlines the concerns of marketplace participants.
In the context of possible conflict around Iran, oil attracts the most attention. The Gulf region is liable for a crucial part of the world's natural material production, and the key way for oil trade for the maritime transport – the Strait of Ormuz – could be effectively blocked in the event of an escalation of the armed conflict. specified hazard is immediately discounted at natural material prices.
This indicates that the likelihood of conflict itself is already driving the valuation of natural material. "However, if the operation were to end after a fewer days or weeks, oil prices could fall as rapidly as they increased – giving the markets fuel to a strong rebound," we read in XTB analysis.
However, the strategical considerations of the American administration are intertwined with fears of combat and possible retaliation. Iran, having 1 of the largest armies in the mediate East and extended defence systems, is not an easy opponent. A full-scale conflict would endanger the destabilisation of the region and a sharp emergence in energy commodity prices.
