This article was written by

Analyst’s Disclosure: I/we have a beneficial long position in the shares of EBKDY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

While this article may sound like financial advice, please observe that the author is not a CFA or in any way licensed to give financial advice. It may be structured as such, but it is not financial advice. Investors are required and expected to do their own due diligence and research prior to any investment.

Short-term trading, options trading/investment, and futures trading are potentially extremely risky investment styles. They generally are not appropriate for someone with limited capital, limited investment experience, or a lack of understanding of the necessary risk tolerance involved.

I own the European/Scandinavian tickers (not the ADRs) of all European/Scandinavian companies listed in my articles. I own the Canadian tickers of all Canadian stocks I write about.

Please note that investing in European/Non-US stocks comes with withholding tax risks specific to the company’s domicile as well as your personal situation. Investors should always consult a tax professional as to the overall impact of dividend withholding taxes and ways to mitigate these.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Heightened geopolitical tensions in the Middle East are keeping global markets on edge, with investors closely monitoring the situation involving Iran as key deadlines draw near. The sharp rhetoric from the United States, coupled with Iran’s steady but firm positioning, has created a climate of deep uncertainty. With no clear direction on how negotiations will unfold, market participants are bracing for volatility.

Speaking with ET Now, James Knightley from ING noted, “It is a really difficult one to call. There is a huge amount of uncertainty, and markets will remain on tenterhooks until the deadline is hit.”

The ripple effects of this uncertainty are being felt in the inflation outlook as well, with central banks increasingly focusing on price stability amid rising energy costs. Supply disruptions linked to the conflict have pushed oil prices higher, reviving fears of inflationary pressures at a time when growth remains uneven. However, the current situation differs from the post-pandemic surge, particularly in terms of demand dynamics. James Knightley pointed out, “The Fed does not have the tools to deal with supply shocks—they cannot print oil,” highlighting the limitations of monetary policy in such scenarios. Importantly, weaker demand conditions could act as a counterbalance, with Knightley adding, “This supply shock is more demand-destructive, so we may not see broad and persistent inflation.”

Crude oil continues to be the most sensitive asset in this environment, reacting swiftly to every geopolitical development. While a potential easing of tensions could lead to a decline in prices, the trajectory remains uncertain. The extent of any correction will largely depend on the level of damage to supply infrastructure and how quickly normalcy can be restored. As James Knightley observed, “Oil could fall if tensions ease, but the extent will depend on the damage to infrastructure,” suggesting that prices may not revert to earlier levels anytime soon.

Given these uncertainties, investors are leaning towards a defensive stance, favouring safer assets amid the lack of clarity. The risk of sudden disruptions or unexpected escalations remains a key concern, even if a temporary agreement is reached. Reflecting the cautious mood, James Knightley added, “Safe haven is still the key right now, as the backdrop remains cautious.” Until there is greater visibility on both geopolitical and economic fronts, markets are likely to stay reactive, with risk aversion shaping investment decisions.