WS #2475

The Middle East crisis continues to dominate market signals, with escalating threats and supply disruptions driving energy price volatility. President Trump's ultimatum to Iran to open the Strait of Hormuz within 48 hours or face attacks on power plants, coupled with Iran's retaliatory threat to strike Gulf energy and water infrastructure, heightens risks of a broader conflict that could severely constrain global oil and gas flows. This is corroborated by multiple sources including AP, Reuters, and European leaders like Macron and Sánchez calling for the strait's reopening, indicating high geopolitical tension. Concurrently, Saudi Arabia's activation of its 1,200-km East-West pipeline is a critical counter-signal, providing a partial workaround to Hormuz closures with exports from Yanbu reaching 3.66 million barrels daily—about half of pre-war levels—though flows remain uneven due to Iranian attacks. This development, reported by Bloomberg, tempers bearish energy pressures but does not fully offset systemic risks, as the CEO of TotalEnergies warns that a war lasting over six months could devastate all global economies due to entrenched supply shortages. European energy markets are already feeling the strain, with Slovenia imposing fuel purchase limits (50 liters for private vehicles) due to scarcity and panic-buying, signaling potential contagion effects. In Asia, China's CSI Energy index is expected to rise 1% at open, reflecting ongoing energy sector volatility, while gold prices are falling sharply in India and China's CSI SSH Gold Equity index is anticipated to drop 5%, suggesting shifting safe-haven flows amid the crisis. Technology and infrastructure risks persist, with Meta opening a flagship store on Fifth Avenue to promote AI wearables, indicating continued consumer tech investment despite broader economic headwinds.