US-Iran Conflict Triggers Global Market Turmoil
The US and Iran have exchanged blows in a direct military escalation that has shaken global financial markets. The conflict began when US forces conducted a strike on targets located on the Iranian island of Larak, citing preparations to deploy sea mines in the Strait of Hormuz.
In response, Iran carried out a massive missile barrage targeting US military bases in Jordan. Additionally, an Iranian supertanker allegedly moving illegally reportedly burst into flames after striking two sea mines, raising concerns about a total paralysis of shipping in the region.
Scott Bessent announced regular weekly imposition of new secondary sanctions on entities linked to Iran. The US administration may follow up with complete cutting off of key Iranian institutions from global dollar settlement systems.
A hawkish speech by Federal Reserve chair candidate Kevin Warsh at the Jackson Hole symposium has triggered deep reshuffling in market expectations regarding US interest rates. Analysts at Barclays now expect two more rate hikes, while BofA suggests pressure for a hawkish Fed move as early as September's FOMC meeting.
Oil prices have risen sharply due to fears of physical blockage of oil supply routes from the Middle East and new sanctions on Iran.