Markets continue to sell off because they are concerned about when the conflict will end, how far oil prices will move, and what comes next.

We need to reach a peak point where markets fully confront the risk of a prolonged conflict and the fact that reopening the Strait of Hormuz will take months to normalize oil and commodity flows.

Oil could reach $150-$200 a barrel if there is a multi-quarter stoppage of the Strait of Hormuz.

The Bank of England has shifted from expecting cuts to expecting hikes due to inflation concerns, and this is hitting the front end of the gilt market.

This supply shock is the worst nightmare for central banks, forcing a dilemma. Likely outcome is hikes first, then potential cuts in 2026 as demand weakens.

High gasoline prices could cancel out the benefit of fiscal stimulus for the US consumer, recalling that $4/gallon gasoline in 2008 accelerated the US recession.

A worst-case scenario of a multi-quarter Strait closure and oil above $125/barrel could trigger a global recession, with Asia being the most vulnerable region (China excepted).