Market Insights March 16, 2026

Middle East conflict: widespread repercussions across commodities 

The conflict in the Middle East is now entering its third week, and its effects are spreading across the entire commodities market. Oil prices have risen by nearly 50%, as the closure of the Strait of Hormuz, through which roughly 20% of global production normally transits, has created a significant supply shortfall. To mitigate the short-term impact, member countries of the International Energy Agency (IEA) have agreed to release 400 million barrels from their strategic reserves.

Natural gas prices are also surging, with increases exceeding 60% in both Europe and Asia, driven by the sharp decline in Qatari LNG exports. Gas inventories are more limited than those of oil, making the situation more fragile for energy-intensive industries, several of which have already begun announcing reductions in activity.

Grain markets have not been spared. The rise in gas prices has sharply increased the cost of fertilizers, which are up 30% in the United States since the beginning of the conflict. Vigilance is therefore warranted, as a surge in agricultural prices can become a source of social tensions.

At this stage, these movements still appear to be temporary. A de-escalation over the coming weeks would allow prices to gradually return toward their levels seen at the beginning of the year. Nevertheless, a prolonged conflict could further amplify the recent upward trend.

Central banks paralyzed by war

This week represents an important juncture for global monetary policy. The leading Western central banks are meeting against an exceptionally tense geopolitical backdrop, shaped by the military escalation in the Middle East. The attack carried out by the United States and Israel against Iran, together with Tehran’s response, has triggered immediate disruption in energy markets, notably owing to the de facto closure of the Strait of Hormuz, through which a vital share of global oil and natural gas trade transits.

For central bankers, the situation revives a still recent memory: that of the inflationary shock that followed the invasion of Ukraine in 2022. At that time, the surge in energy prices contributed substantially to the spike in inflation across developed economies, compelling monetary authorities to undertake the most rapid tightening cycle in several decades. Today, although inflation has slowed markedly in most advanced economies, it has not yet fully returned to central banks’ targets. A renewed and sustained rise in energy prices could therefore further complicate the monetary normalization process.

In this context, it is likely that the principal institutions, whether the US Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of England, or the Swiss National Bank, will adopt a cautious stance at their respective meetings this week. The uncertainty surrounding the duration and intensity of the conflict in the Middle East argues in favour of a wait-and-see approach. Central banks are therefore expected to favour the status quo in the near term, keeping policy rates unchanged while assessing the actual impact of the crisis on inflation and global growth.

Markets will therefore focus closely not only on the decisions themselves, but above all on the communications accompanying them. Official statements and press conferences may provide valuable indications as to how monetary authorities are incorporating this new geopolitical shock into their economic scenarios.

In the United States, investors will be particularly attentive to the possibility of further rate cuts over the coming quarters, a scenario that still appeared plausible before the recent surge in energy prices. In Europe and in the United Kingdom, the key question will be whether the monetary cycle could be disrupted should inflationary pressures re-emerge.

Lastly, in Switzerland, the situation has a distinct dimension. The sharp appreciation of the Swiss franc, which is trading at historically elevated levels against the euro, is reinforcing domestic disinflationary pressures. In an uncertain global environment, we do not rule out the possibility that the Swiss National Bank may once again be confronted with the debate over negative interest rates if the Swiss currency continues to strengthen. 

This week’s figure: 29,5

L’indice VIX de la volatilité des actions américaines a terminé la semaine en forte hausse, indiquant une augmentation sensible du stress sur les marchés financiers. Cependant, aucun signe de panique à ce stade. A titre de comparaison, cet indicateur avait bondi à plus de 60 lors du « Liberation Day » d’avril 2025.