Your portfolio soared on cheap risk - but that's over now
The Iran conflict has led to increased uncertainty and risk in the financial markets, forcing investors to reassess their assumptions about the global economic and financial system. The conflict has resulted in higher prices, increased volatility, and a growing risk premium in assets such as oil and stocks.
The Iran conflict has disrupted global energy markets, leading to higher prices and increased volatility. The spread between Brent and West Texas Intermediate crude oil has widened, reflecting regional supply-demand imbalances and logistical constraints. Investors are becoming more risk-averse, requiring additional compensation to bear volatility risk in equity markets. The conflict has also led to dislocations in refined products, with growing spreads among crude, gasoline, and diesel quotes. The International Energy Agency has classified the conflict as the largest supply shock in the history of the global oil market. The rules governing the global economic and financial system are being rewritten, creating challenges for central banks and policymakers.
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