Global markets will enter September 2026 in one of the most complex environments in years. The problem is not a single factor that an investor can isolate and monitor, but rather the interaction of several shocks at the same time: a US-Iranian war that has been ongoing for months, disruptions in the Strait of Hormuz, the return of oil to levels exceeding $100 per barrel, inflation threatening to rise again, the Federal Reserve facing the prospect of raising interest rates despite economic concerns, the Bank of Japan gradually moving towards austerity, along with a slowdown in global growth.

Most importantly, markets no longer view the war as a purely geopolitical crisis separate from the economy. The war has now become a direct economic shock that travels from the Gulf to oil prices, from oil to inflation, from inflation to interest rates, from interest rates to bonds, stocks, and currencies, and then back again to economic growth.

This is the picture that the investor needs to understand at the present time.

The US-Iran conflict is no longer a limited military confrontation that markets can ignore. Recent developments have brought the war back to the sea and to the world’s most important energy chokepoint, as the US and Iran have exchanged attacks on tankers and ships, while Houthi attacks on targets in Saudi Arabia have escalated. The Strait of Hormuz is crucial because, before the war, nearly a fifth of the world’s oil and gas flows passed through it. But oil traffic through the strait has plummeted since the start of the conflict, and the data itself has become murky. Some estimates place flows at levels far higher than those provided by tanker tracking companies, due to some vessels disabling their tracking systems and the difficulty of monitoring maritime traffic. This very ambiguity has become part of the problem, as the market does not know precisely how much oil is actually moving through the strait.

In the latest escalation, Brent crude oil prices rose above $100 a barrel for the first time since July, after the United States targeted Iranian tankers, and Iran responded with attacks on American ships and targets, coinciding with Houthi attacks on energy-related targets and facilities in Saudi Arabia.

The real economic question is: Will the war continue in a way that disrupts energy flows for an extended period? Markets can absorb the war itself if it remains contained. What they cannot easily absorb is the war escalating into a prolonged crisis in oil and gas supplies, shipping, and insurance.

In the first scenario, a temporary escalation occurs, negotiations resume, and shipping traffic through the Strait of Hormuz begins to improve. In this case, a significant portion of the current risk premium in oil prices is likely to decrease, and the market begins to refocus on normal supply and demand dynamics. In the second scenario, the current conflict continues without a complete closure of the strait. This is perhaps the more dangerous scenario in the medium term, as the market will still have to price in a high geopolitical risk premium , even if oil supplies are not completely disrupted.

The third scenario, the worst economically, involves the war escalating to direct attacks on energy facilities or a de facto and sustained closure of the Strait of Hormuz. This isn’t just about oil prices rising from $90 to $100, but about the market potentially moving to much higher levels, especially if global inventories begin to decline rapidly. For this very reason, I don’t believe investors can treat the price of oil today as simply a number on a screen. The real question is how much oil the world can obtain, at what cost, and how quickly.

A rise in oil prices doesn’t just affect the person at the gas station. Oil is involved in virtually everything: transportation, aviation, shipping, manufacturing, petrochemicals, fertilizers, agriculture, electricity in some economies, and logistics. When oil prices jump from $70 to $100, it’s not just the price of gasoline that increases. The cost of transporting goods, running factories, traveling, distributing food, and producing many other products all rise. This means that when oil prices rise sharply, it acts as a global tax on the economy .

The current risk is greater because the rise in oil prices comes at a time when central banks are still trying to control inflation.

The International Energy Agency (IEA) has lowered its forecast for global oil demand in 2026, now expecting a decline of approximately 1.6 million barrels per day (mb /d) during the year, a direct reflection of the impact of the Strait of Hormuz closure and rising fuel prices. Simultaneously, it anticipates a decrease in global supply of around 4.3 mb/d in 2026, as production and export losses continue in war-affected regions.

Herein lies a very important point. Higher prices lead to two contradictory things. On the one hand, they make oil more profitable for producers and incentivize energy companies to increase investment and production.

On the other hand, it causes consumers and businesses to reduce their consumption, thus weakening economic demand. Therefore, high oil prices can transform from an inflationary driver into an economic slowdown if they persist for an extended period.

The biggest problem for the markets isn’t just that oil is at $100. The problem is what oil at $100 will do to inflation. If oil prices rise, transportation and production costs will rise. And if they continue to rise, companies will start passing some of that increase on to consumers. That’s when inflation spreads from the energy sector to the broader economy. And that’s precisely the scenario the Federal Reserve fears.

The US jobs data for August was exceptionally strong, with 162,000 jobs added compared to expectations of around 56,000, while the unemployment rate remained at 4.1%. This has pushed the probability of a US interest rate hike in September to nearly 60%. Now add to this picture oil at $100. If the labor market is strong and inflation is rising, it becomes very difficult for the Fed to say, “We’re going to cut interest rates because the economy needs support.” It will find itself facing an economy that is still capable of creating jobs but is also facing a new inflationary shock. This is arguably the worst possible environment for growth stocks.

This is the big question. Stagflation simply means that the economy is slowing down while inflation remains high. It’s one of the worst-case scenarios for investors because the central bank is caught in a bind. If the economy is weak, investors want to lower interest rates. But if inflation is high, the central bank wants to raise interest rates or keep them high.

Therefore, the central bank cannot easily rescue the economy without risking a resurgence of inflation. This is the risk that markets have begun to fear. But it is crucial not to exaggerate.

What we have is a growing risk that an energy shock could create a milder version of this scenario if the war continues. The World Bank already forecasts that global growth will slow to 2.5% in 2026 from 2.9% in 2025, with global inflation rising to around 4%, and warns that if energy disruptions become more severe and are accompanied by financial pressures, global growth could fall to 1.3% and inflation could soar to 4.4%. These are not definitive forecasts, but they illustrate the magnitude of the risk at the downside of the distribution.

Is the US economy strong or has it begun to weaken?

The picture in the US is currently mixed , and this is a very important point. The US economy is not in a state of collapse. The labor market remains relatively strong, and the August report was much better than expected. But growth itself has begun to slow. The US economy grew at an annual rate of 1.5% in the second quarter of 2026 , following 2.1% growth in the first quarter. Growth was supported by consumer spending, exports, and investment, while government spending declined. So what does this mean? It means that the US economy is not weak enough to justify an ultra-loose monetary policy, nor is it strong enough to ignore the risks of rising interest rates . This is a very sensitive area for the markets.

The IMF projected that the US economy would grow by about 2.4% quarter-on-quarter in 2026 , with unemployment remaining close to 4%. However, it also warned that rising oil prices due to the war could increase inflation and put pressure on consumption, even if the US energy sector benefited from higher prices. This provides a more accurate picture of the US economy.

There is a very important difference between the United States and other major economies. The United States has become a major producer of oil and gas, so when oil prices rise, American consumers suffer from higher fuel prices, but American energy companies reap higher profits, and investment in the energy sector increases. The IMF believes that the impact of higher oil prices on US growth may be more moderate than in energy-importing economies, because the United States is a smaller net energy importer, while its energy sector may benefit from higher prices.

Europe is even more vulnerable. Higher oil and gas prices mean higher costs for industry, transportation, heating, and energy, putting pressure on businesses and households at a time when the European Central Bank is trying to control inflation. China is in a slightly different position. It is a major energy importer, so higher oil prices represent a cost to the Chinese economy. But at the same time, they could create an opportunity for China if it can purchase oil from alternative sources at competitive prices and take advantage of weak global demand to obtain some raw materials at discounts.

China is not in recession, but the quality of Chinese growth has become more important than the figure itself . Official data showed that the Chinese economy grew 4.3% year-on-year in the second quarter of 2026 , following 5% growth in the first quarter, bringing first-half growth to 4.7% . So yes, China is growing. But it is growing at a slower pace than in the years when it was achieving 6% or 7%, and there are clear structural problems.

The IMF expects the Chinese economy to grow by about 4.5% in 2026 after growing by 5% in 2025, with inflation remaining weak and there being untapped production capacity.

The main problem is not just that China is growing at 4.5%.

The question is, where does this growth come from?

Exports and manufacturing remain relatively strong, but domestic consumption and real estate investment are under pressure. Therefore, while China may achieve 4.5% growth, investors perceive the economy as less healthy than the figure suggests. This is a crucial point for the global economy, as China is not merely a large country; it is one of the biggest drivers of demand for commodities, energy, and raw materials. If China’s growth slows further, it could put downward pressure on global demand for oil, metals, shipping, and manufactured goods.

This can work in the opposite direction to war: war raises oil prices on the supply side, while a slowdown in China puts downward pressure on oil prices on the demand side. This is why it is so difficult to provide a linear forecast for the price of oil.

The global picture isn’t catastrophic, but it has certainly weakened. The World Bank forecasts global growth of 2.5% in 2026 , a low level compared to the past, and notes that nearly two-thirds of economies have had their forecasts downgraded compared to January’s projections. In emerging and developing economies, the World Bank expects growth of around 3.6% in 2026, compared to 4.4% in 2025. So, the global economy is moving toward a slowdown, not a collapse . But the danger is that war creates a kind of shock that the economy can withstand for a short period, but finds it much more difficult if it lasts for a full year.

Initially, companies can absorb the higher fuel costs. Then they begin to reduce profit margins. Then they raise prices. Then consumer spending decreases. Then demand begins to decline. Then companies begin to cut investment and hiring. This is where the energy crisis transforms from an inflation problem into a growth problem .

One of the biggest mistakes is to simply say, “High oil prices are good for the Gulf,” and leave it at that. The situation is more complex. The Gulf faces a rare economic paradox: oil-producing countries benefit financially from high oil prices, but suffer economically if war itself disrupts their exports, trade, and shipping. Saudi Arabia is a prime example. The Saudi economy entered 2026 strongly, but war disrupted some trade and oil exports and affected confidence and non-oil activity. However, Saudi Arabia was able to utilize alternative routes, such as the East-West pipeline, to transport oil to Red Sea ports, and the high oil prices more than compensated for the loss of some export volumes. The IMF projects Saudi Arabia’s growth at around 1.7% in 2026 , with the non-oil sector growing by 2.6%.

This illustrates that Saudi Arabia is not in the same position as a country lacking logistical alternatives. The UAE also possesses greater capacity to reroute trade and services, and therefore its economy was relatively less impacted than those more reliant on direct transit through the Strait of Hormuz. For Kuwait, Qatar, and Bahrain , the risks are greater because their options for rerouting trade and energy are relatively limited. Data shows that the impact of the Hormuz crisis varied considerably among the GCC states, with Qatar, Kuwait, and Bahrain experiencing greater shocks than Saudi Arabia and the UAE, while Oman was relatively better positioned due to its location outside the strait.

This is precisely where a crucial point arises for Kuwait. Higher oil prices are very good for government revenues if Kuwait can sell and export its oil normally . However, if shipping itself becomes the problem, the higher price does not necessarily compensate for the reduced export volumes and the associated logistical and insurance costs.

Here the picture becomes interesting. If oil reaches $110–$120 due to a temporary risk premium, producing countries could experience a huge financial windfall .

Oil revenues are rising, budgets are improving, the current account is improving, and liquidity in the financial system is increasing. But if oil is at $120 because the global economy is facing an energy crisis, some of this gain is lost through a decline in global trade, tourism, and investment, and higher import costs.

Therefore, we cannot look at the price of oil in isolation. We must ask: Why is oil at $120? If it’s at $120 due to high global demand, that’s excellent for producers. But if it’s at $120 because of a war that closed the Strait of Hormuz, that’s a completely different matter. The first is called demand-driven inflation , and the second is a supply shock . And a supply shock is far more dangerous for the global economy.

The United States has a significant advantage: its domestic oil and gas production. But that doesn’t mean rising oil prices won’t hurt it. The global price of oil impacts the prices of gasoline, diesel, aviation, petrochemicals, and transportation. Moreover, the average American consumer has a limited income. If fuel becomes more expensive, a larger portion of household income goes toward energy, leaving less to spend on restaurants, clothing, travel, and services.

This is what’s called the income effect . Then there are the companies. If a transportation company spends more on fuel, an airline pays more for fuel, and a factory pays more for energy, then margins come under pressure. Thus, higher oil prices can lead to: higher inflation → lower spending → lower margins → slower growth. Meanwhile, there’s the energy sector that benefits.

Therefore, the IMF believes that the overall impact on US growth may be more balanced than on energy-importing economies, but it warns that a prolonged period of high oil prices could create broader inflationary effects on the economy.

Here we come to the part that matters most to investors. The market isn’t afraid of inflation alone, nor is it afraid of interest rates alone. The market fears the combination of high inflation, high interest rates, and slowing growth . This is the environment to watch now. If oil prices rise, the CPI rises, and Treasury yields increase, technology and growth stocks will be the most sensitive.

Why? Because a large part of the value of tech companies is based on future earnings. When the discount rate rises, those future earnings become less valuable today. This explains why a strong economic report can be good news for the economy but bad news for the stock market.

Strong jobs → the Fed can raise interest rates → yields rise → stock multiples fall. Conversely: weak jobs → the likelihood of an interest rate cut rises → yields fall → stock multiples improve. But there’s a trap. If jobs are too weak, investors start to fear a recession. So the market wants an ideal zone: good growth, low inflation, and gradually falling interest rates. War and oil threaten to push the economy out of this zone.

It’s not that simple, either. Typically, war means buying gold. But if war raises oil prices and inflation, and leads to higher interest rates, bond yields may rise, making gold less attractive. This is why we’ve seen gold move in a contradictory environment. Geopolitical fear supports gold, but rising yields put downward pressure on it. The dollar isn’t necessarily the automatic beneficiary either. In traditional crises, investors flock to the dollar as a safe haven. But when the US itself is involved in a war, and when there are fiscal and inflationary concerns within the US, the demand for the dollar can become less pronounced.

Bonds, however, face a very difficult equation. Economic crises usually drive investors to bonds. But inflation pushes bond yields higher. Therefore, we may witness unusual volatility in the bond market in the coming period if the oil shock continues. So… where is the war headed? It’s very difficult to say that the war will end on a specific date, and anyone who offers that kind of certainty now is exceeding what the information allows.

But the trajectory can be analyzed. The United States has an incentive to end the crisis if economic pressure on Iran becomes effective and Tehran begins to accept the resumption of shipping traffic in the Strait of Hormuz.

Conversely, Iran has an incentive to retain control of the Strait of Hormuz because it is one of its most powerful bargaining chips. However, its ability to completely close the strait is not unlimited.

The US sanctions and economic pressure have weakened Iran’s ability to export oil and obtain foreign currency, exacerbating its internal economic crisis. Recent reports indicate that US pressure has led to a significant decrease in Iranian oil exports and revenues, yet Tehran continues to resist the pressure rather than make quick concessions.

Therefore, I believe the baseline economic scenario is not an open world war, but rather a prolonged and tense crisis characterized by escalation, de-escalation, and attempts at negotiation . However, the real risk lies in miscalculations: an attack on a major energy facility; damage to a US ship; a de facto closure of the Strait of Hormuz; a strike on a Saudi or Emirati oil facility. Any of these events could rapidly increase the risk premium in oil.

Scenario 1: A De-escalation. If negotiations succeed and shipping through the Strait of Hormuz gradually resumes, oil prices could fall, the risk premium would decrease, and inflation expectations would begin to improve. This would be the best-case scenario for equities. Bond yields would decline, interest rate pressures would ease, and tech stocks would have room to recover. In this scenario, the current oil rally could prove to be just a temporary shock.

The second scenario: a prolonged war but without a complete closure of the Strait of Hormuz. In my opinion, this is the scenario investors should take more seriously. The war continues, oil prices remain high, but energy flows continue partially. In this case, Brent crude could remain at an elevated level, inflation expectations would remain unfavorable, and the Federal Reserve would remain more hawkish than the markets had hoped.

This suggests a volatile market, not necessarily a full-blown bear market . Energy stocks may continue to outperform, while the technology and real estate sectors may face greater pressure.

The third scenario: A Hormuz shock. This is the scenario markets should fear. If oil prices are disrupted sharply and continuously, we could see oil at levels well above $100. The World Bank illustrates the scale of the risk: if energy disruptions become more severe and are accompanied by financial pressures, global growth could fall to 1.3%, with inflation soaring to 4.4%.

In this scenario, the question is no longer “Will the Fed raise interest rates?” but rather: Can the Fed even lower interest rates while inflation is rising? This leads us into a true stagflationary environment, which is the most dangerous environment for stock valuations. What do I see in the bigger picture? If you put all the pieces together, the picture isn’t that the global economy is collapsing. The picture is that the margin of safety has narrowed . The US economy is still growing and the labor market remains relatively strong, but growth slowed to 1.5% in the second quarter. China is still growing, but its growth slowed to 4.3% in the second quarter, while the IMF projects growth of around 4.5% for the whole year.

The world is growing, but the World Bank forecasts only 2.5% growth in 2026. The Gulf region has the advantage of oil, but at the same time, it is at the heart of the crisis. Oil is the linchpin that connects everything. If oil prices fall, markets can quickly return to stories of artificial intelligence, growth, profits, and interest rate cuts. If oil remains at $100, the picture becomes much more complicated.

If it reaches $120 and stays there, a completely different story begins. And if there’s a widespread closure of the Strait of Hormuz, we’re talking about a global economic shock , not just a commodity price surge. What should investors be watching right now? The most important thing at the moment isn’t trying to predict the movement of the S&P 500 or Nasdaq from the chart alone. Watch oil → inflation → bond yields → the Federal Reserve → stocks .

This is the chain reaction currently driving the market. If Brent crude remains high but inflation doesn’t accelerate, markets may be able to absorb the shock. If Brent rises along with the CPI, bond yields will begin to put downward pressure on stocks. If oil and inflation rise while the economy and labor market begin to weaken, the risk of stagflation emerges. However, if tensions in the Middle East ease and oil prices fall, much of the pressure will quickly dissipate, and markets may refocus on growth, earnings, and artificial intelligence.

Therefore, the greatest danger, in my opinion, is not that oil reached $100 today. The danger is that it will remain at $100 or higher for an extended period. The global economy can absorb a short-term shock. What it struggles with is a sustained energy shock . This is the point on which investors should base their decisions in the coming period.