{"id":23944,"date":"2026-03-03T12:17:19","date_gmt":"2026-03-03T12:17:19","guid":{"rendered":"https:\/\/www.europesays.com\/ch\/23944\/"},"modified":"2026-03-03T12:17:19","modified_gmt":"2026-03-03T12:17:19","slug":"ubs-expects-limited-disruption-even-as-strait-of-hormuz-threat-jolts-energy-markets-etenergyworld","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ch\/23944\/","title":{"rendered":"UBS expects limited disruption even as Strait of Hormuz threat jolts energy markets, ETEnergyworld"},"content":{"rendered":"

\"<p>ForFor India, the primary concern remains crude oil prices, given its dependence on imports.Escalation of conflict in West Asia following joint US-Israel airstrikes on Iran has heightened risks to global energy supplies<\/a> and pushed gold close to record levels, The Financial Express reported, citing UBS<\/a>\u2019s latest assessment.<\/p>\n

Gold rose to $5,277 per ounce ahead of the weekend as investors sought safe-haven assets<\/a> amid geopolitical uncertainty<\/a>.<\/p>\n

UBS<\/a> said market volatility is expected to remain elevated as the Strait of Hormuz<\/a> \u2014 a key route that handles roughly one-fifth of global oil demand \u2014 faces potential disruption.<\/p>\n

Regional equity markets have already fallen 2\u20135 per cent, the report said.<\/p>\n

Energy supply risks<\/p>\n

According to UBS, about 2.1 crore barrels of oil flow daily through the Strait of Hormuz<\/a> from producers such as Saudi Arabia and the UAE. While shipping companies have curtailed transit as a precaution, UBS said Iran may lack the military capacity to sustain a prolonged blockade in the face of a strong US presence.<\/p>\n

The bank\u2019s base case assumes any disruption to global energy supplies<\/a> will be brief.<\/p>\n

\u201cOur base case remains that there will be only a brief disruption to the global supply of energy. We expect any initial rise in the price of oil to reverse, at least partially, once it becomes clear that supply disruptions are temporary, critical oil infrastructure is not destroyed, and the need for continued military action fades,\u201d UBS said.<\/p>\n

Inflation<\/a> and central bank response<\/p>\n

UBS analysis showed that a 10 per cent rise in gasoline prices typically adds about 0.2 percentage points to headline inflation<\/a> in the first month, with a cumulative effect of 0.3\u20130.4 per cent.<\/p>\n

However, the bank said major central banks are unlikely to overreact with immediate rate hikes, as policymakers generally avoid responding to one-off commodity price spikes, Financial Express reported.<\/p>\n

Impact on Asia and India<\/p>\n

China remains exposed, with about 13 per cent of its seaborne oil imports sourced from Iran.<\/p>\n

For India, the primary concern remains crude oil prices<\/a>, given its dependence on imports. However, UBS maintained cautious optimism that the duration of the shock may be limited if energy infrastructure damage remains contained.<\/p>\n

The report noted that larger economies are likely to have built strategic reserves to cushion supply disruptions.<\/p>\n

UBS also highlighted the US political backdrop, stating that the administration may be wary of allowing oil prices<\/a> to spiral ahead of midterm elections due to the political sensitivity of high fuel costs.<\/p>\n

Portfolio positioning and outlook<\/p>\n

Rather than exiting markets amid volatility, UBS said holding diversified equity exposure may be more prudent.<\/p>\n

\u201cHistorically, the impact of geopolitical shocks on markets has tended to be short-lived, unless they morph into economic shocks. Making snap decisions to de-risk portfolios amid geopolitical conflict has historically not been a profitable strategy,\u201d the report said.<\/p>\n

Despite the conflict, UBS said it sees potential for US indices to rise about 10 per cent by the end of 2026, with growth prospects in India, China and Japan.<\/p>\n

The bank also expressed preference for sector leaders in Europe, including defence stocks, citing structural growth and their role as portfolio protection in uncertain geopolitical conditions.<\/p>\n

While regional markets in West Asia have fallen as much as 5 per cent, UBS noted that the global economy\u2019s sensitivity to oil prices has declined over time.<\/p>\n

Maintaining diversified exposure across equities, fixed income, and commodities could help investors navigate current volatility, the Financial Express reported.\n <\/p>\n

Published On Mar 3, 2026 at 12:02 PM IST<\/p>\n

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