The escalation of conflict involving Iran and the United States and Israel brought energy-supply risk to the centre of the macro discussion. Investors faced the possibility that a supply shock could lift inflation even if underlying demand slowed.
Oil-price spikes generally raise transport and production costs, pressure household purchasing power and can push inflation-linked yields higher. Equity markets may distinguish energy producers from energy-intensive businesses.
The Strait of Hormuz matters because disruption to a major oil transit route can quickly change expectations for crude supply, shipping insurance and global inflation.
Retrospective commentary prepared October 2026. Market mechanisms are analysis, not predictions or a contemporaneous trading record.