Within ten days of the first strikes on Iran, global markets experienced one of the fastest repricings in modern history. Oil surged past $100 a barrel, a critical threshold that has rattled industries and governments alike. Natural gas prices also jumped after Qatar halted production, tightening already fragile energy supplies. Meanwhile, equity markets from Seoul to London have fallen sharply. The trigger was the disruption of the Strait of Hormuz.
Higher Oil Prices Put India's Economy Under Pressure
If oil prices remain above $100, many countries could face a macroeconomic shock. Energy and transport costs will rise, pushing inflation higher. The most dangerous transmission channel, however, is fertiliser. Nitrogen fertiliser prices are closely tied to natural gas and energy costs. Higher fertiliser prices raise farm input costs, putting farmers under stress. For India, this could mean higher fertiliser subsidies, rising overall price levels and a widening current account and fiscal deficits. All of this will also put upward pressure on bond yields.
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Brent-WTI Spread and the Gas Divide
One of the clearest signals of how the war is reshaping energy markets is the Brent-WTI spread. Before the conflict, Brent, the Middle Eastern oil price benchmark, usually traded $5-6 above WTI, the US-based benchmark. Within days, the spread collapsed and inverted, with WTI trading above Brent on March 9. As the Gulf crude has become harder to access due to Hormuz disruptions, refiners have turned to the US.
Natural gas markets reacted even more sharply. Europe's TTF gas price surged over 60% in a week, while Japan-Korea LNG prices rose over 40%. By contrast, US Henry Hub gas increased only by around 10%, highlighting the relative insulation of the US energy system. As Europe and Asia compete for limited LNG cargoes, prices have surged. Some are even thinking of coal as an alternative energy source, pushing coal prices higher.
Re-dollarisation To Begin
Energy analyst Anas Alhajji has argued that the US has indirectly forced other countries to buy US oil at elevated prices, creating demand for US dollars and assets. The Bloomberg headline from March 5 put it plainly: 'Markets Have One Clear Winner - America.' Being a major shale oil producer and a net energy exporter, the US is becoming a safe haven once again, marking a brief exit from the 'de-dollarisation' narrative in the last few months.
The Stock Market Divide
Another clear pattern emerges from the data. Most Asian markets and European markets have fallen sharply over the past week. These economies are heavily dependent on imported energy, so the oil shock hits them immediately through inflation, raw material costs and currency pressure. But a few regions show relative resilience.
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Russia is one example. Thanks to sanctions, its markets are partly insulated from global capital flows. It is also an oil exporter, which means higher oil prices translate into higher revenues. China has also held up better than most Asian peers. Energy companies rallied early in the crisis, while government policy support during the National People's Congress reassured investors.
China also has diversified oil supplies, including pipeline imports from Russia that bypass the Strait of Hormuz, and large strategic reserves that provide roughly 90-100 days of import cover. Malaysia offers another example. As an exporter of oil, LNG and palm oil, the country benefits from rising energy prices.
A broader geographic pattern is also visible. Much of the Americas - both the North and the South - has been relatively insulated. Markets have fallen, but not as sharply as in Asia or Europe. The US, Brazil, Argentina and Venezuela all possess significant hydrocarbon resources, reducing their exposure to Middle Eastern supply disruptions. In effect, the western side of the Atlantic is far less dependent on the Strait of Hormuz than the eastern side.
Finally, parts of the Middle East itself have shown resilience. Despite the war, markets in Saudi Arabia, Oman and the UAE have remained stable or even risen at times. The reason is simple: oil prices. Higher crude prices improve the fiscal outlook for Gulf economies and boost energy-sector earnings. However, this can be short-lived if the war destroys critical infrastructure.
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Safe Haven Tests
One of the most counterintuitive outcomes of the crisis has been gold's behaviour. Despite the geopolitical turmoil, gold prices fell because investors faced margin calls and needed cash urgently. They sold gold, which has given them exponential profits in the last couple of years. However, once the initial liquidity shock passes and inflation pressures become clearer, gold may rise again. On the contrary, cryptocurrencies such as Bitcoin and Ether have fared relatively better than gold. Currently, they are stable but must continue proving themselves to secure the safe haven status.
A New Financial Geography
The first ten days of the Iran conflict have revealed deeper structural realities about the global economy. Traditionally, energy shocks divided countries into two broad groups: producers and importers. This crisis has added a clear geographical dimension to that divide. Much of Asia and Europe, dependent on Middle Eastern energy, have seen sharp market declines, while the Americas have been relatively resilient.
At the same time, the crisis has once again reinforced the role of the US dollar and US financial markets. In short, energy security and geography continue to shape global power and resilience in times of crisis.
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