09.09.2026 - Oil above $100 – The Risk Markets Underestimated

Oil prices continue to rise substantially, with Brent crude trading above USD 100 per barrel again after several weeks below that level.

The main driver remains the escalating conflict between the US and Iran. The US has started targeting Iranian oil tankers, while Tehran retaliated immediately with attacks on US naval assets and military bases across the Middle East.

One fact remains unchanged: the Strait of Hormuz is effectively closed and remains far from normalization.

Markets:

• Equities: Broadly lower, while technology stocks are holding up relatively well

• Bonds: yields moving above recent highs - US 10y yield 4.84%, Japan 10y yield 2.88%

• Commodities: Oil prices substantially higher, WTI around USD 97/barrel and Brent around USD 101/barrel
  Precious metals prices higher, gold back towards USD 4’400/oz, silver above USD 67/oz

• Currencies: US dollar slightly higher - Japanese Yen higher, USDJPY 154

• Cryptos: Risk-off sentiment is weighing on cryptos - Bitcoin falling back towards USD 78k

• Volatility: The VIX index rises slightly above 16 (still good opportunity for hedging)
  
  

My View: For several weeks, my view on oil has stood clearly apart from the broader market consensus. While investors were pricing in a normalization of the Strait of Hormuz and relatively contained oil prices, I repeatedly highlighted that oil was trading too low relative to the underlying geopolitical and supply risks.

That risk is now increasingly being repriced.

At the same time, oil inventories fell to historically low levels, limiting the ability to offset supply disruptions through reserve releases indefinitely.

The broader implications are becoming increasingly important for financial markets: higher oil prices → renewed inflation pressure → higher bond yields → tighter financial conditions.

This is exactly the wrong direction for both Washington and financial markets.

With oil above USD 100, bond yields pushing back towards new highs and geopolitical tensions escalating, the probability of broader market turmoil is increasing.

Last week, I increased my existing long volatility exposure, as I continue to see meaningful downside risk in equity markets.

Seasonality adds another risk factor: September and October have historically been challenging months, particularly around US midterm-election years.

For now, my positioning remains defensive.

Become a member to access more valuable market updates like this