Related
news
14 September 2026
UK retailers battle for consumer wallets against a tricky backdrop7 min readAuthor10 September 2026
What the TTFAC? The pension acronym that can cause tax-free cash confusion5 min readAuthor10 September 2026
How I invest: prioritising my ISA, cutting costs and riding out volatility6 min readAuthor
Shares Magazine
When the US-Iran war started in late February 2026 some of the warnings about the impact on energy markets were dire – with oil prices expected to spike well above $100 per barrel.
Seen through that lens, the actual outcome six months on has been relatively benign. Oil has flirted with the $100 mark at regular intervals but not traded consistently above that level for any length of time and fuel shortages have mainly been localised.
This speaks to some resilience on the part of the global economy but also to the stop-start nature of the war, with Tehran and Washington oscillating between peace efforts and renewed hostilities.
Markets have also absorbed the shock better than some had feared, helped by continuing strength in corporate earnings.
As we write though, we are back in a hot phase of the conflict and Brent crude oil, the global benchmark, is above $98 per barrel. With the world’s stockpiles depleted and autumn and winter likely to prompt increased consumption of energy in the northern hemisphere, it makes sense to think again about what the impact might be if we don’t get a resolution to the crisis in the near term.
Berenberg chief economist Holger Schmieding comments: “Since late April, we had based our economic forecasts on the assumption that the price of Brent crude would decline to $75 by the end of this year. This forecast assumed traffic through the Strait of Hormuz would gradually recover from the near closure after the start of the Iran war.
“Until mid-July, oil prices normalised even a bit faster than we had anticipated. At the margin, this may have contributed to the upside surprise in Eurozone and UK growth in Q2. But that luck seems to have run out. While active hostilities with heavy mutual bombardment may be over for now, the Strait of Hormuz remains virtually closed with no apparent resolution in sight.”
This seems a fair assessment of the situation. The debate now is what impact this will have on wider inflation and, as a corollary of that, interest rates. The obvious implication of rising prices is that rates will go up to contain them. Though Berenberg’s Schmieding argues such an approach could be misguided.
He says: “Central banks cannot do anything about adverse supply shocks. They should not react with rates to the direct effects of such disruptions, which raise prices but hurt growth at the same time.”
He notes we are yet to see much evidence of the surge in energy prices permeating into other areas like wages, the so-called ‘second order’ effects which central banks tend to be particularly sensitive to.
The period since February 2026 is a reminder not to panic as the worst-case scenarios often end up proving to be overdone, and that remains the case today. But staying watchful and making sure portfolios remain suitably diversified is a sensible approach given what remains a volatile backdrop.
Tom Sieber: Content Editor
Tom Sieber is AJ Bell's Content Editor. He was previously the Editor of Shares Magazine. He has been with the business since 2012.
Tom is a regular contributor to the AJ Bell Money & Markets...