17 JULY 2025
For the most part, markets have taken the recent Middle East turmoil in their stride, but it is rare for geopolitical events to sustain permanent damage on investor sentiment.
The main concerns were around energy markets, especially when the Iranian’s threatened to close the Strait of Hormuz, through which approximately 20% of global oil supplies flow.
However, the oil price proved to be far more resilient than many feared.
The chart below shows the daily % change in the Brent crude oil price, going all the way back to the late 1980s.
Last month, the biggest daily move was +7%, which resulted from Israel’s initial strikes on Iran’s nuclear plants. An identical move occurred on the downside when a ceasefire was announced.
This means the recent Middle East unrest has caused much less oil price volatility than the likes of Covid, Russia’s invasion of Ukraine and even the 1990 Gulf War.
Which suggests weak fundamentals in energy markets are keeping a lid on the geopolitical premium.
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