The "War Premium" in the Global Markets—Sharp Fluctuations in Oil, Gold, and Stock Prices

News of a ceasefire between the US and Iran has stirred waves in the financial markets, with various assets showing intense divergent volatility.
Oil prices fluctuate sharply: After the ceasefire news was announced, international oil prices initially plummeted. WTI crude oil futures fell by 14.56%, to $96.50 per barrel; Brent crude oil futures dropped by 11.85%, to $96.32 per barrel. WTI crude briefly fell below $90.00, as Iran agreed to reopen the Strait of Hormuz for two weeks in exchange for a temporary ceasefire.
However, oil prices quickly rebounded afterward. As Israel launched airstrikes on Lebanon and Iran closed the strait, prices rose again. As of April 9, WTI May futures settled at $97.87 per barrel, up 3.66%; Brent June futures settled at $95.92 per barrel, up 1.23%. Reuters reported that oil prices rose over 3% on Thursday, driven by doubts about the fragile ceasefire agreement and concerns that energy supplies will remain disrupted.
Even more worrying is the extreme distortion in the spot market. Data from the London Stock Exchange Group shows that the spot price of Brent North Sea Forties crude, a benchmark for immediate delivery, approached $147 per barrel on Thursday—surpassing the highs reached before the 2008 financial crisis and far above the international benchmark Brent June futures contract, which is about $50—strong signals of a severe shortage in the oil market.
Most analysts believe that oil prices are unlikely to return to pre-conflict levels in the short term. ING Group stated that future oil price trends will depend on whether negotiations can reach a lasting agreement and whether shipping through the strait can return to normal. They expect the market to remain volatile during negotiations. UBS pointed out that it is unclear when and to what extent shipping through the strait will recover; if the passage is blocked again, energy prices could rebound rapidly. Moreover, even under optimistic scenarios, restoring energy infrastructure and resuming production will take weeks or even months.
UK-based Capital Economics predicts that if the ceasefire remains effective, Brent crude oil prices in the second quarter are expected to average around $95 per barrel, falling back to about $80 by the fourth quarter. Michael Heg, an analyst at Société Générale, said that assuming the ceasefire is successful and tensions ease, the oil price floor by the end of the year could be around $85 per barrel. If countries start stockpiling oil for energy security reasons, prices could rise further.
Gold prices continue to rise: As a traditional safe-haven asset, gold is in demand amid geopolitical uncertainties. Spot gold increased by 0.98%, to $4,766.16 per ounce; spot silver rose by 1.62%, to $75.34 per ounce. Gold prices once surged over 2%, breaking through $4,800 per ounce.
Stock markets rebound strongly: The ceasefire news triggered a rally in global equities. The three major US indices all rose, with the Nasdaq up 2.8%, the S&P 500 up 2.51%, and the Dow Jones up 2.85%, marking six consecutive gains for Nasdaq and S&P 500. Tech stocks led the rally, with Intel up over 11%, Meta up over 6%, and Google and Amazon up over 3%. Chinese concept stocks also generally rose, with the Nasdaq Golden Dragon China Index up 3.05%. European markets posted their largest gains in over four years, with the STOXX Europe 600 rising 3.9%, the biggest single-day increase since March 2022. Tourism and leisure stocks led the gains, while the energy sector was the only one to decline.
Renminbi exchange rate: Onshore and offshore RMB against the US dollar temporarily surged over 300 basis points, reaching new highs since April 2023. Experts say that, driven by easing Middle East tensions, China’s foreign trade environment remains stable, with exports continuing to grow strongly, providing solid support for the RMB exchange rate.
Federal Reserve concerns: The March FOMC minutes show that policymakers discussed the potential divergent paths of the US economy following the outbreak of the Iran conflict. Most officials worry that prolonged war could harm the labor market, necessitating rate cuts; however, many also emphasized inflation risks, which could ultimately require rate hikes. "The vast majority" of officials believe that bringing inflation down to the 2% target may take longer. The Fed kept interest rates unchanged at 3.5% to 3.75% at the March meeting.
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