What the Markets Are Telling Us About the War in the Gulf

Investors started the past week confident that the Israeli-U.S. attack on Iran would be another short war they could all but ignore. The S&P 500 even rose slightly on Monday.

They ended the week worried that a global shock to oil prices from what’s become a widespread Middle East conflagration is in some ways a repeat of 2022’s Russia invasion of Ukraine and threatens stagflation.

The investment question now is whether signs of worry are a reason to buy the dip, or a reason to get out before things get even worse.

Start with the comparison to Russia’s disastrous attack on Ukraine. Oil prices spiked to $120 a barrel from $90 before the assault as investors priced in disruption to supply. They are still only at $91 today. But in percentage terms, the rise is the same as in 2022, just from a lower level. The oil market is seriously spooked.

What the Markets Are Telling Us About the War in the Gulf

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