Buying at the Worst Time, Selling Just Before It Rebounds? [My Response!]
This Wednesday, June 25, as markets seem to recover a semblance of calm, it’s time to take stock of the latest geopolitical events and their direct impact on commodities, especially oil.
Relative Calm in the Middle East
After several days of tension fueled by the conflict between Iran, Israel, and the United States, the situation appears to be stabilizing. Admittedly, communication remains unclear, and sometimes contradictory information feeds uncertainties. But one point stands out: China, now once again “allowed” to buy Iranian oil, plays a crucial role in this temporary easing.
Remember, more than half of Iran’s oil production is destined for China. The resumption of this trade has mechanically helped push crude prices down, after a surge sparked by initial fears.
Oil, the Tension Barometer
Oil remains the key asset to watch in this kind of scenario. For several days, it has served as a thermometer for geopolitical tensions. Prices have fallen 15% in just three days.
Why? Because the announced Iranian attacks turned out to be more symbolic than real. There was no actual military conflict, but rather a coordinated show of force. Result: no blockade of the Strait of Hormuz, a vital artery for global oil transport.
Prices have therefore returned to pre-conflict levels. A kind of return to normalcy? Not quite. It’s a fragile truce, still dependent on the next diplomatic or military spark.
Markets and Rates: Between Uncertainty and Hope
In this climate of mild calm, US interest rates are the second major focus. Markets hope for a pause in the rate hike cycle, which could give risky assets a bit of breathing room. But again, the situation remains ambiguous. Between the FED’s cautious statements and still-unstable economic data, no clear direction has emerged.
Conclusion: Markets are experiencing a pause in apparent calm, but geopolitical fundamentals remain extremely volatile. Let’s keep in mind that this “pause” can be overturned at any moment, especially if new tensions arise in the Middle East or if monetary policies take a harsher turn.
The watchwords remain: vigilance and responsiveness.