Oil, War, and the Fragile Arteries of Global Trade

Last week, the market stopped looking at the Iran conflict as just another headline from the Middle East. It started seeing it for what it really is: a global problem. The war widened, oil facilities were hit, tanker traffic through the Strait of Hormuz collapsed, and Kuwait even declared force majeure and began cutting crude output as shipments were disrupted. That matters because Hormuz is not just a regional shipping lane — it is one of the most important energy arteries in the world. When that route is threatened, the impact does not stay in the Gulf. It spills into fuel costs, inflation expectations, currencies, stock markets, and overall risk sentiment everywhere.

By this morning, (Sunday, March 8), there was a small sign of possible easing after Iran’s temporary leadership council reportedly agreed to pause attacks on neighboring Gulf countries unless provoked. That gave regional markets a bit of breathing room. But the bigger problem has not disappeared. Oil flows are still badly disrupted, storage is filling up in parts of the region, and markets are still trading with the fear that any fresh escalation could quickly turn a logistics shock into a deeper global supply shock. In other words, traders are starting this week with one eye on diplomacy and the other on the Strait of Hormuz. 

🎙️ That is why this coming trading week, from March 9 to March 13, is not really about one chart or one economic number. It is about whether the world believes this conflict is starting to cool down; or whether last week was only the beginning. If the conflict stabilizes, markets may unwind some of the panic. If it escalates again, oil remains the main transmission channel, and from there the pressure spreads into gold, the dollar, equities, and the major FX pairs. 

If you want to understand the market right now, start with oil. Brent pushed above $90 and settled Friday (March 6) around $92.69, while WTI settled around $90.90, after one of its biggest one-day jumps since 2020. Earlier in the week, Reuters reported WTI at $81.01 and Brent at $85.41 on March 5, which shows just how aggressively the market repriced the risk as the week went on. The move was driven by disrupted shipping, halted exports, damaged energy infrastructure, and fear that more producers could be forced to reduce output if the disruption continues. 

📰 For this week, oil will likely remain the first asset to react to every new headline. If tensions cool and shipping risk eases, oil could pull back simply because so much panic premium has already been priced in. Reuters’ reporting on oil options suggests many traders still see this as a sharp but possibly temporary shock rather than a permanent structural shortage. But if the conflict spreads again or Hormuz stays effectively blocked, oil can stay elevated or squeeze even higher, and that would keep pressure on everything else.