ANALYSIS: Markets are shaking, oil prices are soaring — Iran sends Wall Street into a tailspin

A country that cannot be ignored or contained

Iran is not just any geopolitical player. It has the fourth-largest oil reserves in the world. It is a country that controls—either directly or through its allies—strategic chokepoints from the Persian Gulf to the Bab el-Mandeb Strait. And it is a country that, having been under U.S. sanctions for decades, has little left to lose.

This asymmetry is precisely what terrifies the markets. A rational actor with little to lose is the most dangerous adversary there is. Wall Street’s risk models don’t know how to handle this variable. So they do the only thing they know how to do when faced with the unknown: they sell.

The Nuclear Program as a Permanent Sword of Damocles

Behind the surge in crude oil prices and the stock market plunge lies a specter that no one names but everyone sees: Iran’s nuclear program. The IAEA (International Atomic Energy Agency) has documented significant advances in uranium enrichment in recent months. And every centrifuge that spins is a clock ticking as well—but not in the same direction.

Diplomatic negotiations—suspended, resumed, and suspended again—resemble a shadow play where each actor performs for a different audience. Washington is playing to its voters. Tehran is playing for its survival. And the markets, for their part, are playing to avoid being the last ones out when the music stops.

The Mechanics Behind the Surge in Crude Oil Prices

When Brent crude jumps by several dollars in a single trading session, it’s not just a market fluctuation. It’s a wake-up call. Buyers rush to snap up futures contracts like people stacking sandbags before a flood. Airlines, shipping companies, manufacturers—anyone who relies on jet fuel to stay in business—are frantically hedging their positions.

And this hedging, in and of itself, fuels the rise. It’s the classic vicious cycle of oil crises: fear of a shortage creates the shortage. Fear of a price hike creates the price hike. The market becomes its own self-fulfilling prophecy.

The Silent Winners of the Crisis

While Wall Street bleeds, certain players are quietly counting their profits. Saudi Arabia, which didn’t need an excuse to keep prices high, now has the perfect one. Russia, under sanctions but still exporting, sees every extra dollar per barrel as a lifeline for its war economy.

And yet, even these apparent winners are walking a tightrope. An open conflict in the Persian Gulf would benefit no one—not even the producers. Because the destruction of production capacity is irreversible, and the logistical chaos of a closed Strait of Hormuz would starve entire economies. Including those that believe they stand to gain from it.

The markets have a long memory

Investors in 2025 still bear the scars of 2008, 2020, and every crisis in which they believed that “this time is different.” And every time, it wasn’t. The hard-learned lesson is simple: when warning signs flash, those who hesitate lose.

So they no longer hesitate. Trading algorithms are programmed to detect the words “Iran,” “escalation,” and “military” in news wire reports and trigger sell orders in milliseconds. Before a human analyst has even finished reading the headline, billions of dollars have already changed hands.

Artificial intelligence amplifies panic

This is the cruel irony of modern algorithmic trading. Designed to eliminate human emotion from the markets, it has created something worse: an artificial, instantaneous, and uncontrollable emotion. Algos don’t panic—but they react with a speed and intensity that human panic could never match.

A tweet from a politician. A three-line Reuters dispatch. A ship’s movement detected by satellite. Each of these micro-events is processed, analyzed, and monetized in a fraction of a second. The market no longer thinks—it reacts. And this thoughtless reactivity is the perfect breeding ground for flash crashes.

33 kilometers that hold the planet hostage

Take a map. Find the Persian Gulf. Follow the Iranian coastline southeast. There, between Iran and Oman, lies a strait so narrow you could almost swim across it. 33 kilometers. That’s all that stands between the global economy and a cataclysmic energy crisis.

Every day, about 21 million barrels of oil pass through this corridor—one-fifth of global consumption. Shut off that flow—through a blockade, a mine, or a naval incident—and the price per barrel won’t just double. It will triple. Maybe more. And yet, most people wouldn’t be able to locate the Strait of Hormuz on a map.

History repeats itself—always in this same corridor

The tanker war of the 1980s. The Iranian mines of 1988. The oil tanker seizures of 2019. Every decade brings its share of incidents in this cursed corridor. And every incident reminds us of the same uncomfortable truth: global prosperity hangs by a geographical thread that any determined actor can sever.

Military planners at the Pentagon have dozens of scenarios for the Strait of Hormuz. Marine insurers at Lloyd’s of London have models for every type of incident. But no scenario, no model can predict the exact moment when an Iranian patrol boat commander decides that, on that particular day, he will open fire.

Gold, the Eternal Beneficiary of Chaos

As in every crisis, gold has surged. The yellow metal produces nothing, pays no dividends, and generates no income. But it does the one thing that stocks, bonds, and currencies cannot do in times of crisis: it provides reassurance. And that reassurance comes at a price—a price that rises with every drone shot down, every sanction imposed, and every aircraft carrier deployed.

U.S. Treasury bonds have also seen a massive influx of capital. The paradox is cruel: investors are fleeing risk by buying the debt of the very country at the heart of the crisis. It’s like seeking refuge in an arsonist’s house. But when fear reigns, logic falls silent.

Bitcoin: Safe Haven or Mirage?

Bitcoin has shown an ambiguous reaction—a hesitation that its evangelists don’t like to see. Supposed to be “digital gold,” supposed to be uncorrelated with traditional markets, the leading cryptocurrency has shown once again that, in times of real crisis, it is a speculative asset like any other. And yet, some institutional investors have seen it as an entry opportunity. One person’s chaos is always another’s fortune.

A continent that has learned nothing

Europe—which believed it had solved its energy dependence by weaning itself off Russian gas—is discovering to its horror that it has merely switched dealers. The LNG (liquefied natural gas) replacing Russian gas is transported, in part, via shipping routes that pass dangerously close to the potential conflict zone.

Germany, Europe’s largest economy, remains vulnerable to any major energy shock. France, protected by its nuclear power plants, is less so—but its companies are exposed through global supply chains. And Italy, dependent on imported oil, watches the surge in crude prices like a thirsty man watches the rain fall on the other side of the window.

The energy transition: catalyst or victim of the crisis?

Every oil crisis reignites the same debate: should we accelerate the transition to renewable energy or first secure the supply of fossil fuels? The answer, invariably, is both—which amounts to choosing neither.

Shares of green energy companies have not benefited from the crisis. They have fallen along with the rest of the market. Proof, if any were needed, that markets do not think in terms of a desirable future but in terms of immediate risk. And the immediate risk, today, is called oil, is called Iran, is called war.

Behind the Scenes That No One Sees

While the markets were in a frenzy, phones were ringing in offices not captured by any cameras. The U.S. State Department. The Quai d’Orsay. The British Foreign Office. The Chinese Ministry of Foreign Affairs—the latter perhaps the only one still able to speak to both sides without being suspected of bias.

China, the leading importer of Iranian oil despite the sanctions, has leverage that no one else possesses. Beijing buys Iranian crude at a discount—a relationship that gives China unique diplomatic access to Tehran. And yet, China is particularly keen to avoid a conflict in the Gulf. Its already fragile economy would not survive oil prices at $150 per barrel.

The Ambiguous Role of Intermediaries

Oman, Qatar, the United Arab Emirates—the small Gulf states play a mediating role that their size would not suggest. The Sultanate of Oman, in particular, has historically served as a channel between Washington and Tehran. It was in Muscat that the secret negotiations for the 2015 nuclear deal (JCPOA) began.

But these channels operate in silence. And when public rhetoric heats up, diplomatic silence becomes nearly impossible to maintain. Every bellicose statement from one side forces the other to respond—and every response narrows the space for negotiation. Diplomacy always dies from the same poison: the need to appear strong in front of the cameras.

The worst-case scenario that no one dares to model

Analysts appearing on CNBC and Bloomberg talk about a “temporary correction,” “short-lived volatility,” and a “return to normal.” What they don’t say—because saying it on the air would cause a real panic—is that the worst-case scenario isn’t unlikely. It’s simply unthinkable.

A direct armed conflict between the United States and Iran would not be a “surgical operation.” Iran possesses one of the largest arsenals of ballistic missiles in the Middle East. Its allied militias—in Lebanon, Iraq, Yemen, and Syria—form a network of proxies capable of striking simultaneously on multiple fronts. And its cyber capabilities, often underestimated, could target critical infrastructure far beyond the region.

The Real Cost of a War Nobody Wants

Here’s what the risk models at Goldman Sachs and JPMorgan calculate internally but never publish: a major conflict in the Gulf could send oil prices above $150 per barrel, trigger a global recession, and cause a food crisis in the most vulnerable countries—since transportation costs directly affect food prices.

And yet, the very same institutions that calculate these doomsday scenarios continue to recommend “buying the dip.” The schizophrenia of the financial markets has never been more apparent. On the one hand, they say, “Be careful.” On the other, they say, “Opportunity.”

Your portfolio is taking a hit—should you panic?

If you have a retirement savings plan, an investment account, or even a few stocks bought through a mobile app, this affects you. A market crash isn’t just some abstract concept for economists in suits. It’s your money. Your retirement. Your real estate plans. Your future.

Financial advisors always give the same advice: “Stay calm, don’t sell in a panic, think long-term.” And that advice is—in most cases—the right one. But it’s also terribly easy to give when it’s not your money that’s disappearing.

The Difference Between Calculated Risk and Russian Roulette

What advisors don’t tell you is that some downturns aren’t “corrections.” Some are paradigm shifts. The question every investor should ask isn’t “When will the market rebound?” but rather: “Do the conditions that drove the rally still exist?”

If the answer is yes—if it’s just a passing fear, a fleeting geopolitical spasm with no lasting consequences—then the markets will rebound. If the answer is no—if the escalation materializes, if the Strait of Hormuz closes, if the conflict widens—then “mean-reversion” models are worthless. And it is this uncertainty, more than the decline itself, that is the investor’s true enemy.

The Vicious Cycle of the Standoff

Escalation is not a choice. It is a mechanism. Every provocation calls for a response. Every response is perceived as a provocation. And every actor is trapped by their own rhetoric—unable to back down without losing face, unable to move forward without risking disaster.

Historians of World War I are familiar with this pattern. In 1914, no European leader truly wanted war. But the system of alliances, automatic mobilizations, and the fear of appearing weak—all conspired to make the avoidable inevitable. Are we in 1914? No. But are we immune to a similar logic? History does not repeat itself, but it rhymes—and that rhyme sends a chill down the spine.

The human factor—the variable that algorithms ignore

At the end of the chain of command are human beings. Tired. Under pressure. Misinformed. An Iranian frigate commander who misinterprets a move by the U.S. 5th Fleet. A drone pilot who misidentifies a target. A political advisor who, at 3 a.m., chooses the strong response because he’s too exhausted to seek the wise one.

Wars almost never begin with a rational decision at the top. They begin with a mistake in the middle. And the markets intuitively know this truth—which is why they react with disproportionate violence to every sign of tension. Because disproportion is, paradoxically, the most rational response to human irrationality.

Dependence on hydrocarbons is a form of voluntary servitude

Every oil crisis reminds us of the same thing. Each time, we swear, “Never again.” And each time, we return to the fossil fuel tap like a sleepwalker returning to bed. Global dependence on oil is no accident. It is a collective choice, renewed every day, every quarter, every budget.

Global investment in fossil fuels has reached record levels in recent years—even after COP28, even after the promises, even after the IPCC reports, which increasingly resemble eulogies. And yet, when oil prices soar, the entire global economy feels the strain. We have built our prosperity on a fuel that any regional conflict can cut off.

The real question that no one is asking

It’s not “when will the markets rebound?” It’s not “will oil prices fall again?” The real question is this: how many more crises will it take before we accept that our economic model is built on sand—oil-rich sand, to be sure, but sand nonetheless?

The markets will rebound. Oil prices will fall again. Analysts will say they saw it coming. And in six months, a year, two years, another article headline will look exactly like this one. With another country. Another strait. Another reason to panic. But always the same dependence. Always the same vulnerability. Always the same lesson we refuse to learn.

A warning, not a catastrophe—for now

Let’s be clear: as of this writing, there is no war. There are tensions. Threats. Military movements. But no direct armed conflict. The markets have reacted to a probability, not a fait accompli. And that distinction is crucial.

But it’s also fragile. The line between a possibility and a reality can be measured in hours. Sometimes in minutes. And it’s precisely this fragility that should keep us awake at night—not the Dow Jones’s plunge, not the rise in oil prices, but the terrifying ease with which everything can come crashing down.

The world of tomorrow does not yet exist—but it is taking shape

Whether this crisis is resolved through diplomacy or escalates, one thing is certain: tomorrow’s financial world will not be the same as yesterday’s. Investors will reprice geopolitical risk. Insurers will raise marine insurance premiums. Companies will accelerate—or not—their energy diversification.

And we, spectators of this theater of the absurd where algorithms shift billions while diplomats search for the right words, will be left with this nagging question: when did we accept that our daily comfort depends on a 33-kilometer maritime corridor in a gulf that most of us wouldn’t even be able to name?

The answer is simple. We never accepted it. We simply never thought about it. Until today.

Signed, Jacques PJ Provost