US vs Iran: threat of war shakes the world

America’s assassination of a key figure in the Iranian regime has jolted bullish investors out of their complacency. Could we now be facing an oil spike and a global crash?

It took just three days of 2020 for optimistic financial markets to run into “harsh reality”, says The Financial Times. Equities had made impressive gains in 2019, with the US S&P 500 index rising by more than a quarter and Britain’s FTSE 100 climbing by 12%. Investors were looking forward to more. But America’s assassination of Qasem Soleimani, a key Iranian general, prompted “a reassessment of risk” and sent investors scurrying into safe-haven assets. After Iran’s retaliatory strike on US airbases in Iraq on Wednesday there were growing fears that a series of tit-for-tat strikes could spin out of control, ultimately causing a war between Washington and Tehran.

Oil prices rose 4% following the US attack, eclipsing $70 per barrel on Monday before falling back; a 1.5% bounce, which also soon subsided, followed Iran’s retaliation. At $70.73, Brent crude rose to its highest level since September, when a drone attack on a major Saudi oil facility at Abqaiq temporarily knocked out 5% of global supply. Yet that spike proved short lived and prices are still below their 2019 high of $74.5 per barrel. So what will happen this time?

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Markets editor

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019. 

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere. 

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful. 

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.