Markets opened the week on a cautious note as geopolitical tensions and oil supply concerns weighed on investor sentiment. Volatility surged across asset classes, with bitcoin falling below $100,000, equity futures sliding, and gold climbing as investors rushed into safe-haven assets.
The heightened risk environment follows rising fears of retaliation in sensitive regions, particularly around oil infrastructure and maritime corridors such as the Strait of Hormuz, a vital shipping lane for global oil supply. Analysts warn that any disruption could severely impact oil flows, rattling energy markets and broader investor confidence.
Josh Gilbert, Market Analyst at eToro, noted that this type of market anxiety is becoming increasingly familiar. “This kind of uncertainty is quickly becoming the new normal for markets,” he said. “Unless we see a sharp escalation, I expect some level of calm. But the potential for tensions to rise further is very real.”
Oil prices are firmly in focus. While supplies through the Strait of Hormuz remain uninterrupted, traders remain wary. Any sign of retaliation or military activity in the region could send prices soaring, at least in the short term. That scenario would place added pressure on major energy-producing nations like the UAE, which relies heavily on market stability.
Despite recent gains, analysts say oil may struggle to maintain upward momentum unless there’s a material disruption. Much depends on OPEC+, which is currently in the process of unwinding earlier supply cuts—a move that could offset price pressures, at least temporarily.
But the bigger risk for markets, especially equities, goes beyond oil prices. Rising energy costs feed directly into inflation expectations, which in turn could reshape the outlook for interest rates. Investors will be paying close attention to inflation data from the US and Australia, as well as statements from central banks later this week.
“For equity markets, the concern isn’t just geopolitical risk—it’s what higher oil prices mean for inflation and rate policy,” said Gilbert. “That’s the longer-term threat.”
As global investors navigate a complex landscape of war fears, inflation uncertainty, and oil volatility, risk appetite is likely to remain subdued. While the worst-case scenarios have yet to materialise, the current atmosphere of uncertainty is enough to keep markets on edge.
With key economic indicators due in the days ahead, market watchers will be looking for signs of resilience—or fresh cause for alarm.
