As the war in the Near and Middle East enters its second week, Brent crude crossed the symbolic threshold of 100 USD per barrel this morning (+12%, to 105 USD). Iraq, Kuwait, and Qatar announced production cuts over the weekend. This decision also aims to avoid saturating their storage capacities as long as the Strait of Hormuz remains congested.

Economists generally estimate that a 10 USD increase in the price of a barrel leads to an additional 0.1 to 0.2 points of inflation. Since the beginning of the year, Brent has risen from 62 USD to 105 USD, an increase of nearly 70%.

Kharg Island at the heart of the stakes

In this context, the U.S. administration is reportedly discussing the possibility of seizing Kharg Island, a strategic Iranian oil terminal located in the Persian Gulf, according to the media outlet Axios. For Christopher Dembik (Pictet AM), a possible intervention on this island, which is half the size of Manhattan, will be the key issue in the coming days and weeks. "You find gazelles there... and above all, oil terminals that export 90% of Iranian crude oil," the expert points out.

For Christopher Dembik, however, the current oil surge remains exaggerated. "Financial markets seem to be reacting as if the entire Middle Eastern oil production were suddenly cut off from global trade, which does not correspond to reality," he says, calling for people "not to panic."

Nevertheless, nervousness remains high in the markets, as evidenced by the rise in the VIX, dubbed the "fear index," which has crossed 31 points (+7.23%).

Furthermore, Washington is also reportedly considering sending special forces to seize the stocks of highly enriched uranium that Tehran is said to possess. Two options are being studied: removing the material from Iranian territory or having nuclear experts intervene to dilute it on-site.
On this subject, White House spokesperson Karoline Leavitt stated that Donald Trump is keeping "all options open and is not ruling anything out."

On the political front, the Revolutionary Guards yesterday named their new leader, Mojtaba Khamenei, son of Ayatollah Ali Khamenei, who was killed at the start of the conflict in an Israeli bombardment. The new Supreme Leader is already considered a "legitimate target" by the IDF. His appointment de facto creates a family dynasty at the top of the Islamic Republic, even though the 1979 revolution aimed to denounce and overthrow the Shah's dynasty. This development could therefore further fuel discontent among a portion of the Iranian population.

Stocks in motion

In Paris, Thales is the only CAC 40 stock in the green (+1.4%), benefiting from the resurgence of geopolitical tensions. The other 39 stocks in the index are retreating, notably -3.9% for URW and -3.4% for Schneider Electric and Michelin.

Energy stocks, on the other hand, are benefiting from the surge in crude. Aker is up 1%. Goldman Sachs remains at a sell rating but slightly raises its price target to 220 NOK from 210 NOK previously.

Equinor is gaining nearly 3%, supported by an analysis from Goldman Sachs which raises its price target from 210 to 240 NOK, while maintaining its sell recommendation. The adjustment reflects the rise in Brent and outlooks deemed solid despite the American bank's reservations.

Shell is also up 2%. The oil and gas group has concluded several agreements with Venezuela to explore new energy opportunities in a context of global supply tensions.

Conversely, the aviation sector is suffering from the rise in oil prices. Wizz Air is tumbling 6%, Lufthansa 4.5%, Air France 3.4%, while easyJet is down about 3% and Airbus 2.3%.

In Switzerland, Roche is losing more than 5% in Zurich after the failure of a clinical trial for giredestrant, an oral treatment for breast cancer.

A light agenda

The economic agenda is relatively light today. Investors will notably be waiting tomorrow for the Chinese, German, and French trade balances, as well as home sales in the United States.

On the foreign exchange market, the euro is up 0.3% against the dollar at 1.155 USD, while gold is gaining 0.6% at 5,110 USD per ounce.