Because if you thought things in the Middle East had calmed down… the exact opposite has happened.
Not only have they not calmed down, but the situation has escalated to levels that are now clearly affecting the global economy.
The Houthis have actively entered the war, oil has reached 3-year highs, and the markets right now… have no idea what to do.
And when markets don’t know what to expect, volatility skyrockets.
WHAT CHANGED
So, let’s pick things up from where we left off.
The US presented a plan to de-escalate tensions, aiming for a potential ceasefire and the reopening of the Strait of Hormuz.
It sounded like a serious attempt at calming things down.
But Iran responded negatively. In fact, it rejected the proposal and put forward its own terms, which include compensation, geopolitical sovereignty, and essentially full control over the situation.
In other words? The two sides aren’t just far apart. They’re operating in completely different worlds.
And when that happens in international relations… it usually leads not to resolution, but to escalation.
A NEW FRONT
And this is where things start to get complicated.
Because while everyone was focused on the conflict between Iran and Israel, another player entered the scene and changed the game entirely.
The Houthis.
The pro-Iranian group from Yemen, which until now had mostly been active in maritime attacks and strikes on commercial ships, decided to enter the war directly.
And they did it in the clearest possible way. With ballistic missiles targeting Israel.
This was their first direct military involvement in this specific conflict.
And that changes everything, because now we’re no longer talking about a conflict between two countries, but about a network of allies that is starting to activate.
The biggest issue here, however, isn’t just the military strikes, but where these actors are located.
Because the Houthis effectively control one of the most critical chokepoints in the world.
Bab el-Mandeb. A passage through which a massive portion of global trade and energy flows. Yes, something like the Strait of Hormuz.
And the last thing anyone wants is for tensions to rise to the point where that passage gets shut down as well.
OIL
Naturally, the market reacted immediately, and oil prices surged. US crude touched $100, while Brent exceeded $112.
And here we need to make a very important clarification.
The market isn’t just reacting to the war, but to the fear of supply disruption.
Because on one hand, we have the Strait of Hormuz, through which roughly 20% of the world’s oil passes.
And right now, the situation there is extremely unstable. Tankers are changing routes. Major shipping companies are suspending transit. And flows are far from guaranteed.
Some cargo gets through, some doesn’t.
And that is the worst-case scenario for the market: uncertainty.
And on the other hand, there is the fear that the Houthis could also block Bab el-Mandeb, another equally critical passage.
WHAT RUBIO SAID
Amid all this, political statements are adding even more confusion.
Rubio said that military operations could be completed in weeks rather than months, while Trump talks about negotiations going very well.
At the same time, we see thousands of troops being deployed to the Middle East, new strikes taking place, and overall a situation that does not suggest de-escalation.
And the markets… are stuck in the middle, trying to price in both scenarios.
Which is almost impossible.
Still, CEOs of the world’s largest energy companies are warning that the market hasn’t fully understood what’s happening.
That the problem is bigger than it appears. We’re talking about 8 to 10 million barrels per day being taken off the market.
And some are making the heaviest comparison of all, to the 1973 oil crisis.
So we may be moving from a simple price shock to a real supply shock and an actual shortage of oil.
INVESTMENT OUTLOOK
In the middle of all this, investors are trying to find direction.
But the truth is, there is no clear direction.
Because right now, the markets are pricing in two completely different scenarios.
On one side, a potential agreement.
On the other, an energy crisis.
And as long as these two scenarios coexist… volatility will remain high. Prices will rise and fall with every piece of news, and stocks will react sharply.