Global equity markets have not yet fully considered the economic consequences of the ongoing Middle East conflict, as per Christopher Wood, the global head of equity strategy at Jefferies. Despite nearly two weeks passing since the U.S.-Israel strikes on Iran, markets have surprisingly remained resilient. Wood noted that the markets seem to be banking on the assumption that Donald Trump might back down again, potentially leading to a quick resolution of the conflict.
Wood highlighted the uncertainty surrounding Iran’s and Israel’s positions even if a swift resolution occurs. He pointed out that Russia and China have been the primary beneficiaries of the war so far. Russia stands to gain from higher oil prices and the opportunity to sell crude to countries like India. India’s Nifty 50 index has dropped over 6% since the conflict began, reflecting the risks posed by elevated energy prices and geopolitical instability.
The combination of increased energy costs and geopolitical tensions presents inflationary pressures and growth challenges, leaving markets exposed to further escalation or prolonged conflict. Scott Bessent, the U.S. Secretary of Treasury, announced temporary authorization for countries to purchase Russian oil stranded at sea to expand the global oil supply. Brent crude surpassed $120 a barrel in early March, while natural gas prices rose by about 14% to $3.259 per MMBtu.
Currently, Brent crude is trading at $99.99 per barrel, showing a slight decline, and West Texas Intermediate (WTI) dropped to $95.09 per barrel. The national storage capacity for crude oil and petroleum products stands at 74 days. Prime Minister Narendra Modi assured that the government is committed to ensuring that Indian citizens do not face any adverse effects due to conflicts in other parts of the world.
