Why Oil is Soaring and Bringing Down Our Markets

Oil just took a 30% overnight spike. We haven't seen anything like this since the 1974 and 1979 shocks! In fact, this geopolitical tremor is violently impacting our daily economy. So, I suggest we calmly decode this stock market panic together. Let's see how to protect our capital without stressing in front of the screens.

High-tension geopolitical context

The escalation in the Middle East has heavily impacted Iranian oil infrastructures. Naturally, huge black clouds were seen looming over major depots. Normally, Iran was under a strictly enforced embargo. But in reality, the country was selling 80% of its oil to China. With the current blockade, China has to quickly secure supplies elsewhere. As a result, legal demand suddenly spikes. That's the spark immediately igniting global black gold prices.

Rising tension on everyday prices

This situation creates severe economic tension. Over here in Europe, a liter of gasoline will quickly cross the €2 mark. Diesel will also soar due to our cyclical refining problems. Over in China, production will inevitably cost more for their industry. In short, a significant wave of inflation on our everyday products is highly likely.

Four concrete impacts on the stock market

Here is why financial markets are going through such a rough patch.

1. The CAC 40 drops: The 8,000-point psychological support finally gave way. Europe is giving in to pessimism much faster than the United States.
2. Major indices plunge: The DAX, Dow Jones, and Nasdaq are hitting their annual lows. It's a highly complex playground for buyers.
3. The United States remains calm: They had shut down oil wells in Texas. With a pricey barrel, Texan producers will simply reopen them. They will regain their energy independence within a few weeks.
4. Safe havens are faltering: In a very rare occurrence, gold is pulling back by about 1%. Even Bitcoin has forgotten the $74,000 euphoria to fall heavily.

A trader's stance in the face of panic

Managing this high volatility demands true discipline. Trying to accurately guess the absolute bottom is a terrible idea. Actually, it's just like watching a particularly violent action movie. Let the other actors panic on screen. Instead, grab a good cigar or some ice cream, and remain unbothered. The further the index drops, the more massive the algorithmic rebound effect will be.

The limits of hasty anticipation

However, we need to keep one simple nuance in mind. The rest of the story will depend on potential upcoming military strikes. If tensions ease, oil prices will slowly and orderly decline. Conversely, if a major oil field is destroyed, prices will explode once again. For now, our one and only smart response is to be patient.

Situation summary

Simply put, prioritize your mental rigor and capital preservation. Let a highly capricious market run its course and just wait for clear signals. By the way, I'd like to remind you that Wall Street is now on Daylight Saving Time. American markets therefore close at 9:00 PM instead of 10:00 PM for us. Stay clear-headed and highly cautious.

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