As discussions continue over tariffs between the USA and China, which still require official confirmation regarding the resolution of disputes, uncertainty is hanging over the market.

In a new turn of events, the escalating tensions in the Middle East, following Israel’s attack on Iran and Iran’s subsequent retaliation have worsened the geopolitical climate in the area. This troubling development has raised concerns among traders about potential supply disruptions in the Middle East. The immediate market response involved a retreat from equities, with investors flocking to safe-haven assets, benefiting oil and gold prices right away. The situation’s progression will depend largely on how events in the region unfold, and it remains to be seen how much the conflict will escalate and who else may become involved.

In light of the rising tensions, oil experienced its largest single-day gain since March 2022, with prices spiking nearly 13 percent at one point before settling back somewhat.

This surge is attributed to fears of supply interruptions, which could be influenced by margin calls and traders covering their short positions. The market was clearly unprepared for this surge, leading to a spike in risk premiums. If conditions stabilize, prices could decline unless supply disruptions occur, especially through the Strait of Hormuz.

The pressing question remains how long this uncertain situation will persist and when it may subside. If oil prices continue to rise without any relief, the economic impacts could be significant........

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