Breaking News: March 2, 2026

Energy: Markets Are Pricing in a Scenario of a Temporary Closure of the Strait of Hormuz

The deterioration of the situation in Iran has triggered a sharp surge in oil prices: +8% on Monday, bringing the cumulative increase to nearly 35% since the December lows. At this stage, crude prices now incorporate a risk premium estimated at approximately 20% relative to underlying fundamentals. Markets are even assigning credibility to a scenario involving a temporary closure, lasting less than one month, of the Strait of Hormuz, through which nearly one-fifth of global oil supply transits. Tensions are not confined to the oil market. The liquefied natural gas (LNG) market has reacted with even greater intensity: European and Asian benchmark prices have risen by more than 40%. These regions remain heavily dependent on gas supplies from Qatar, whose exports are likewise exposed to geopolitical risk.

From this point forward, two principal scenarios emerge. The first, which we consider the most likely, is that of a gradual normalization. Should tensions ease over the coming days or weeks, the risk premium currently embedded in energy prices would be expected to fade progressively, bringing oil and gas quotations back toward levels more closely aligned with underlying supply-and-demand dynamics. The second scenario would involve a protracted conflict. In such a case, more severe damage to regional oil and gas infrastructure could result in a sustained, and potentially far more pronounced, surge in prices, with significant global repercussions. At present, however, we assign a low probability to this outcome.

Geopolitical Tensions and Temporary Market Volatility

Over the weekend, the geopolitical environment deteriorated markedly following the joint attack by the United States and Israel on several Iranian cities. The subsequent escalation, notably retaliatory actions by the Islamic Republic against Israel and several other Gulf countries, raises serious questions regarding the impact of the current flare-up on the global economy and financial markets. 
Yet this morning, Asian and European equity markets opened the week with relatively moderate declines, considering the gravity of the weekend’s developments. Are investors displaying complacency by overlooking the risks to global growth?

Based on the economic consequences of geopolitical tensions observed over recent decades, it appears to us that caution and composure remain warranted at this stage. Historically, such exogenous events have tended to disrupt financial markets only temporarily, with a return to normal conditions generally occurring within days or weeks.

This is the scenario we are adopting today. A temporary increase in volatility is, of course, justified in light of the prevailing climate of uncertainty. Similarly, the sharp rise in energy prices is understandable, but it should not pose a significant threat unless oil prices surge well above current levels and remain elevated for a prolonged period. Indeed, it is the duration of the present crisis that will ultimately determine its impact on financial markets.

A swift resolution of the conflict within a matter of weeks would likely leave no lasting scars on the U.S. or European economic outlook, particularly in a context where underlying fundamentals remain exceptionally robust. Absent a protracted escalation, the risk of recession in developed economies would be negligible.

Looking further ahead, the consequences of a potential regime change in Iran could even prove supportive for financial markets. The removal of what is arguably the most destabilizing factor in the Middle East could lead to a meaningful decline in regional geopolitical risk and to a normalization of oil prices, two developments that equity markets would undoubtedly welcome. 
Accordingly, we recommend looking beyond current disruptions and maintaining a focus on the economic fundamentals of the world’s major economies, which continue to support an overweight allocation to risk assets.

Our current positioning, with a pronounced emphasis on Swiss equities, the Swiss franc, and gold, appears particularly well suited to the prevailing environment. We therefore do not recommend any significant adjustment to this allocation, although selective profit-taking may be considered in the short term.

This week’s figure: 0.91

Benefiting from its safe-haven status, the Swiss franc continues to appreciate, moving below the 0.91 threshold against the euro.