00:00 Speaker A
Big picture investors have stopped worrying about the Middle East. That’s right. Um, oil has come down hard. Let let’s say this pause with Iran holds. Let’s say it holds. What would be ripple effects for the markets? Like what what do analysts say in that scenario?
00:15 Jake
Oh, there’s a lot of good that happens. Not only does energy get cheaper, but fertilizer starts coming from the Persian Gulf back to the market. Metals prices for aluminum and copper and nickel all start falling. The Asian economy, which is really indexed to the semiconductor trade, can get stronger because those import dependent economies aren’t being strung out by high energy prices. Everything starts moving a little slower. The AI investment cycle has more room to run because money’s not being taken up by an energy crisis. There’s a lot of good that happens if everything starts renormalizing, but that’s assuming we actually do get a renormalization that this deal actually holds.
01:05 Speaker A
So, conversely, let’s play the other side out. Let’s say the pause breaks down for whatever reason, then what?
01:12 Jake
So, Ryan Sweet, Chief Global Economist at Oxford Economics laid this out today in a really good report. What are the risks here if that deal falls apart. His point is that the deal is the single biggest market risk for the second half of 2026 because everything else the market should be worried about is wrapped up in that. He cites trade policy, AI CAPEX, Central banking, the US midterms, and China’s demand cycle and demand environment. All of those things, he says, are really indexed to this. You know, take one example. Let’s say that the deal falls apart, oil prices go back up. At the same time that the US government is putting section 301 tariffs back on products. That’s going to push inflation back up and energy prices back up. If that happens, the Fed could be more likely to hike. If the Fed’s more likely to hike, you could see a slow down in AI investment. That would hurt the South Asian economies, that would hurt the Chinese demand picture. All of this kind of rolls together, as your last guest said, momentum begets momentum in both a good way and a bad way here.
02:30 Speaker A
So if I’m an investor, I’m watching this right now, what would be sort of the key signs and signals, Jake, I need to watch to gauge whether things with Iran are improving or deteriorating?
02:44 Jake
So it’s pretty simple. It’s is oil moving? Are products moving unimpeded? Are those transits both in and out of the Persian Gulf actually happening? Are they picking up reliably? Are there no slowdowns? Is there no re- renegotiation of a or renewal of conflict between the US and Iran? Are there no more arrant strikes on ships? Are there no more rounds of air strikes? What does the conflict in Lebanon by Israel look like and how is Iran responding to that? It’s the same things we’ve been watching for months. Are products moving or are they not? Everything else is downstream of whether that straight is open and whether the market sees those volumes reliably picking up.