Global X: Attacks on Harc Island Reduce Likelihood of Near-Term War Resolution

Global X ETF Australia states that the latest attack marks a clear escalation in the conflict and could trigger retaliation from Tehran.

Investment strategist Justin Lin said:

“Previously, the U.S. deliberately avoided targeting energy infrastructure, fearing it would drive up oil prices.”

“This shift in stance seems to indicate that the U.S. believes the likelihood of resolving the conflict in the short term has decreased, and is now preparing for a longer-term confrontation. In this situation, economic pressure is a necessary measure.”

“Before last weekend, the market was pricing in a short-term conflict that would only cause mild inflation pulses, with most parties hoping for a ceasefire and a quick return to normal energy flows.”

“No matter how long the war lasts, energy flow can only be restored if the infrastructure remains largely intact.”

“The U.S. attack on Iran’s oil facilities not only jeopardizes this premise but also signifies a significant escalation in the conflict, potentially prompting Iran to retaliate in kind.”

“This greatly increases the risk of sustained high energy prices and significantly worsens inflation and economic growth risks.”