Conflicts in the Middle East and their consequences for the global economy
Expectations regarding further Fed decisions on interest rates remain stable. The current interest rate is 3.50-3.75%, and the majority of investors (95.9%) expect it to remain at this level until the next FOMC meeting scheduled for April 29, 2026. Only 4.1% of market participants anticipate a hike to the level of 3.75-4.00%. In the context of the current extreme fear in the market (Fear & Greed Index at 16/100), the stability of the Fed's decisions may be seen as a stabilizing factor.
The situation in the Middle East remains tense. Israeli Prime Minister Netanyahu announced that Israel supports the USA in opening the Strait of Hormuz, which is crucial for global oil supplies. Meanwhile, Iranian missiles struck an oil refinery in Haifa and damaged an F-35 aircraft, increasing the risk of escalation of the conflict. Additionally, QatarEnergy reported damages to its LNG facilities, which may lead to a 17% reduction in exports over the coming years. These events may affect oil and gas prices in global markets.
The U.S. Department of the Treasury has issued a general license allowing the sale of Russian crude oil and petroleum products loaded onto ships from March 12, 2026. This decision may be an attempt to stabilize the supply of commodities in the face of global tensions. Meanwhile, discussions at the ECB regarding potential interest rate hikes may begin in April if a quick resolution to the conflict in the Middle East does not occur. The ECB predicts that in a pessimistic scenario, inflation could reach 4.4% in 2026, highlighting the need for cautious monetary policy.
Tomorrow will bring further developments in the Middle East, which may affect energy commodity prices. Investors should pay attention to potential market reactions and further decisions regarding monetary policy in the USA and Europe. Any new information regarding diplomatic efforts aimed at easing geopolitical tensions will also be crucial.
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