Middle East conflict reignites, global markets hold their breath before opening: the US dollar leads the way with strength, oil prices surge with a bowstring taut

Bloomberg News has learned that the ongoing escalation of Middle East conflicts is once again testing the resilience of global markets. Investors are waiting quietly for the opening of U.S. stocks, U.S. bonds, and energy markets on Sunday evening New York time.

Initial market signals show a shift toward safe-haven assets: during early trading, the U.S. dollar strengthened significantly, the Swiss franc rose slightly against major currencies, and risk-sensitive currencies like the Australian dollar led declines; Australian and New Zealand government bonds opened higher.

During Sunday trading hours, the benchmark indices in Saudi Arabia and Egypt both fell over 2%; as of 5 p.m. New York time, Bitcoin remained relatively stable. U.S. stocks, bonds, crude oil, and gold futures will open at 6 p.m. New York time, marking the first comprehensive reflection of investor sentiment.

Previously, markets had been pressured by concerns over artificial intelligence (AI), potential credit risks, and valuations at historic highs. Now, they must also face the impact of worsening Iran and Middle East tensions—conflicts that could disrupt global shipping and impact tourism. Oil prices and inflation concerns have become central market issues, with U.S. stocks experiencing their largest monthly decline since April last month.

Dec Mullarkey, Managing Director at SLC Management, said, “All of this is happening during a fragile period in the markets, and investors are becoming more cautious. U.S. stocks are highly sensitive to disruptions in the tech sector and credit pressures. Expectations of rising commodity prices may force fund sell-offs and further reduce risk exposure.”

Analysts note that if the Middle East conflict persists, the likelihood of oil prices reaching $80 per barrel increases; if the Strait of Hormuz is closed, prices could surge to $108. About one-fifth of the world’s oil flows through this strait, making it a critical energy choke point.

Last Friday, Brent crude futures closed at $72.48 per barrel.

Data shows that tanker traffic through the Strait of Hormuz has nearly come to a halt, with three ships attacked near the Persian Gulf entrance, heightening fears of supply tightening.

On Hyperliquid, a crypto derivatives platform, oil-related contracts rose over 4% in the afternoon, reaching $90.99 per barrel; gold increased by 1.10%, to $5,379.60 per ounce; silver rose 1.88% in 24 hours, to $96.65 per ounce.

These 24-hour traded contracts have become popular tools for cross-market speculation outside traditional hours, usually settled in USD-pegged stablecoins like USDC.

Elias Haddad, Head of Global Market Strategy at Brown Brothers Harriman, wrote in a client report, “When markets open on Monday, oil prices are likely to surge. However, given that global oil production continues to exceed demand, investors should avoid chasing higher oil prices now.”

Risk Escalation

Ajay Rajadhyaksha, Global Head of Research at Barclays, pointed out that although markets previously downplayed geopolitical conflicts (such as the calm response when U.S. forces struck Iran’s nuclear facilities in June last year), if this round of conflict worsens, the risk of significant impact on the global economy will rise. He advised against rushing to buy stocks.

“The current risk-reward ratio is not attractive. If the stock market corrects enough—say, the S&P 500 drops more than 10%—there could be buying opportunities, but it’s too early now.”

Macro strategist Michael Ball said, “After weekend events, markets will likely show safe-haven sentiment. Until the scale and duration of the conflict become clear, the willingness to bottom-fish will probably decrease significantly.”

Joe Gilbert, Portfolio Manager at Integrity Asset Management, expects energy and defense stocks to rise when trading begins. Saudi Aramco, the state-owned oil producer, rose 3.4% on Sunday, its largest single-day gain in over four months.

Long-term oil price surges could complicate U.S. bond movements: safe-haven buying would push yields down, but rising energy prices could feed into inflation, pushing yields higher.

Maxence Visseau, Research Director at Arkevium in Dubai, said, “I expect initial market reactions to see yields fall by at least 5 to 10 basis points. But oil prices are a key variable. If disruptions in the Strait of Hormuz push prices to $80–$90, long-term yields will be caught in a tug-of-war between safe-haven demand and inflation expectations re-pricing.”