00:00The U.S.-Israeli war against Iran has shaken the global oil market.
00:05Iran controls about 5% of global oil and its Strait of Hormuz,
00:09a key oil trade route that carries about one-fifth of global oil flows,
00:13could be impacted by the strikes.
00:15This has serious implications for all global markets.
00:19It matters for stocks because it may squeeze corporate profits and weigh on risk appetite.
00:24For bonds, because it may strike inflation.
00:26For currencies, because it may send the dollar higher.
00:31It even matters for central bank monetary policy because of its impact on inflation.
00:37So, after oil surge as much as 13% to above $82 a barrel, where could it go from here?
00:42At one extreme, a ceasefire would allow the Iranian state time to rebuild
00:47and could see oil falling back toward $65 per barrel, according to Bloomberg Economics.
00:52At the other, intensifying conflict could see prices rising toward $108 a barrel if the Strait of Hormuz is shut.
01:01We've seen such playbooks before.
01:03Historically, we've seen geopolitical shocks tend to produce sharp, hard moves that often reverse.
01:09Oil prices retreat, for example, from its opening highs.
01:13Safe havens like Treasuries edge higher after an initial rush before reversing their moves.
01:18It is a sign traders are pausing for reflection and taking stock of whether higher oil prices and inflation
01:25may cloud perceived haven attributes of bonds.
01:29So, in the end, it all boils down to oil prices and whether they stay elevated.
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