Geopolitical events priced into market outcomes. Uncertainty made visible.
Oil, inflation, shipping, FX, food, defense. Every figure carries its evidence tier: fitted to a real event, modelled, or honestly unpriced.
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Every situation currently modelled, with how confident we are in each and its most likely outcome. Select one to see it in full below.
Executive Summary
The Hormuz shock is no longer a scenario. It happened. On 28 February 2026 a US–Israeli air war against Iran closed the Strait of Hormuz. Iran mined the waterway and struck merchant shipping; tanker traffic fell to almost nothing and the IEA called it the largest supply disruption in the history of the oil market. Brent ran from $70.9 to a peak of $138.2 on 7 April — the day before the ceasefire. It never went back: Brent averaged $84 in July and $91 in August, and when drones shut Saudi Arabia's East-West pipeline in September it reached $130.80 on 15 September (EIA daily spot).
But the strait has not normalised. Mines remain, war-risk premiums remain, transits sit well below pre-war levels, vessel attacks continue, and Iran now asserts standing authority over passage. The live question is no longer whether a Hormuz shock occurs. It is whether this armed truce holds, normalises, or breaks.
Our Armed Truce case () is therefore a description of the present, not a forecast of a war: Brent in the $80s–$110s with spikes like September's to when a bypass route is cut, roughly 1.2 points of excess inflation, and a persistent shipping-cost tax rather than a supply crisis. Re-escalation () reopens the closure from a worse starting point — inventories drawn down, mines already laid, insurers withdrawn — with Brent at $150–180. Normalisation () sees the MOU hold, mines cleared and premiums decay, with Brent settling $70–78.
What the war actually did to portfolios (measured, net of market): energy producers +19.4%, LNG +26.4%, tankers +25.1%, defense +6.1%, utilities +10.1% — against aviation −9.9% and luxury −19.7%. Gold, notably, delivered +0.9%: it did not show up. Every sector sensitivity in this model is now fitted to those observed moves rather than to a proxy conflict.
Not financial advice. Sector sensitivities are estimates fitted to one six-week war and one secondary analogue. A longer closure could transmit through earnings in ways this sample never observed.
Scenario Framework
- Armed Truce (): Iran retains leverage over the strait; transits below pre-war; Brent peaks ~ (measured, 15 Sep 2026)
- Normalisation (): MOU holds, mines cleared, premiums decay; Brent settles $70–78
- Re-escalation (): Truce collapses, strait closes again from a worse base; Brent $150–180
- Betas fitted to the 2026 Hormuz war itself (70%) + Ukraine 2022 (30%), net of market
Historical Precedents
- 1973 Oil Embargo: CPI +9%, GDP −2.9% OECD (18-month lag)
- 1990–91 Gulf War: Oil spike +140%, receded in 6 months
- 2003 Iraq: Minimal oil disruption; different dynamics
- 2022 Russia-Ukraine: Energy price +200%, Europe CPI +10%
- Hormuz closure analog: 1987–88 Tanker War partial disruption
Energy Assumptions
- Iran produced ~3.3M bbl/day pre-war; ~20% of seaborne oil and up to ~30% of traded fertiliser transit Hormuz
- Hormuz: 20% of global oil, 18% of LNG transits daily
- SPR releases offset ~8–12 weeks of supply gap
- Saudi spare capacity: ~2.5M bbl/day short-term relief
- Shale ramp: 6–9 month lag to meaningful volume increase
Macro Model Inputs
- A 10% oil rise held for about a year → +0.4 pts to global inflation (IMF: Georgieva, Mar 2026; WEO Apr 2026)
- Shipping +100% → −0.4% global trade volume
- War confidence shock: −0.5 to −1.2% GDP premium
- Defense crowd-out: +1% GDP defense = −0.2% private invest.
- Flight-to-USD: −10–20% EM FX basket
Data Sources
- EIA.gov: Oil supply, reserve capacity (live via /api/eia-oil)
- IMF WEO: GDP baselines and forecasts
- BIS: EM currency and debt exposure
- SIPRI: Defense expenditure data
- FAO: Food Price Index (world food commodity prices)
- Baltic Exchange: Shipping rate benchmarks
Key Uncertainties
- Iranian ballistic missile accuracy vs Saudi oil infrastructure
- Chinese policy: sanctions compliance vs sanctions-busting
- US domestic political appetite for sustained engagement
- Alternative energy substitution speed (LNG, renewables)
- Global recession contagion via credit market tightening
| Region | GDP Yr1 | Inflation Add. | Energy Exposure | Food Security | Currency Risk | Debt Stress | Recovery | Signal |
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