Amid War

Until recently, the idea that the US dollar and oil prices could rise almost in perfect sync seemed nearly absurd to most market participants. For decades, the global financial system operated under a different logic: a stronger dollar typically pressured commodities lower, while expensive oil was often associated with a weaker American currency. This relationship was considered one of the market’s unwritten rules.

But the current conflict in the Middle East has not simply disrupted that pattern — it has effectively turned it upside down.

Over the past several weeks, global markets have been pushed into a state of exceptional tension. The military escalation involving Iran and the disruption of critical shipping routes have triggered a serious shock throughout the global energy system. The Strait of Hormuz is not just another point on the map. A massive share of the world’s oil exports passes through this narrow corridor. Any threat to navigation in the region immediately alarms investors because they understand that the consequences extend far beyond a local conflict.

Against this backdrop, Brent crude prices have surged dramatically. A nearly 45% increase in just a few months is no ordinary market fluctuation — it is the kind of move typically seen during periods of global crisis.

What makes this rally especially important is that oil is not climbing because the global economy suddenly needs more energy. In fact, many economies are slowing down. The main driver is fear — fear that physical supply could become severely constrained.

Whenever traders believe that oil flows may be disrupted, prices begin to include a “risk premium.” The higher the probability of further escalation, the larger that premium becomes. As a result, oil prices are currently...