Key insights
- Rising oil prices due to geopolitical tensions in the Middle East, specifically Iran's potential to disrupt oil supply via the Strait of Hormuz, could lead to increased inflation and higher interest rates. This, in turn, may negatively impact the private credit market and U.S. equities.
As we all know, the price of oil is a parameter in the cost function of virtually every product and service. This war will end, not when Trump gets tired of it, but when the Iranians decide they've hurt the world economy so badly the West will never try this again. And as I pointed out at the start of this war, the Iranians can keep the Strait closed for months if not longer. This will raise interest rates, which will knock the legs out from under the private credit market. https://oilprice.com/Energy/Energy-General/The-Cushion-Is-Gone-and-the-Oil-Market-Is-Now-Exposed.html