The market impact of the U.S. entering into conflict with Iranian territory this weekend is much milder than anticipated on Sunday. Investors are stoically enduring the nervousness, and the stock markets are not dramatically declining, at least for now, awaiting Tehran's response. The nearly 6% surge seen in the European Brent price earlier, above $81, has now moderated to a 1% increase, reaching $78 per barrel. The American West Texas rises slightly more, by 1.5%, to $75.
The opening of European stock markets is more volatile than the session seen in Asia, where major indices even closed with gains. The Ibex 35 falls by 0.5% in the early stages, to 13,779 points; the German stock market drops by 0.4%, a decline mirrored in Paris and the EuroStoxx 50. The Italian FTSE Mib is currently the hardest hit, with losses of 0.8%.
This Sunday, the Iranian Parliament approved the closure of the Strait of Hormuz following the U.S. attack on three of its nuclear facilities. This strait is a key maritime passage through which 20% of the world's oil transits, with China playing a crucial role. The U.S. has reportedly sought China's mediation in the conflict to prevent the strait's closure. According to Bloomberg, analysts believe that the Iranian regime is acting alone, as traditional allies like China and Russia have only offered "rhetorical support," and pro-military groups like Hamas and Hezbollah "are unable to gather a common response."
AXA IM's Chief Economist, Gilles Moëc, emphasizes that "the market's reaction to the U.S. attack will depend on how far Iran decides to retaliate. We still believe that closing the Strait of Hormuz would be counterproductive for Iran: beyond the military response it would provoke, it would drastically reduce its financial capacity and strain its relationship with China, which heavily relies on Gulf oil. In a rational calculation, Tehran should opt for caution," he concludes.
JP Morgan analysts warn that whenever a regime change has occurred in the region, oil prices have typically surged by up to 76%, averaging 30%. Another U.S. bank, Goldman Sachs, also does not rule out prices exceeding $110 per barrel if the Strait of Hormuz remains closed for a month.
Another alternative is selective interruptions in oil supply. This is suggested by analysts at the Commonwealth Bank of Australia, as reported by Reuters, who consider it a more forceful way to "deter oil tankers" and would make "more sense than closing the Strait of Hormuz, as Iran's oil exports would be suspended" if the conflict escalates. They also foresee European oil prices hitting a minimum of $100 per barrel if the situation escalates.