Oil Strategists Flag $100 to $300 Range as Hormuz Closure Upends G7 Bond Safe-Haven Trade

The Iran-Israel conflict has upended the conventional safe-haven trade in government bonds. Instead of yields collapsing, they are rising as investors demand compensation for the prospect of sustained stagflation: tight energy supplies elevating costs while geopolitical risk weighs on growth. Strategists surveyed by Bloomberg warn that unless the Strait of Hormuz reopens soon, the bull case for European equities degrades materially. Oil commentary on the Street ranged from "elevated above $100" to "could touch $300 per barrel if the war drags on," setting a wide but uniformly hawkish tone.

Central banks are caught in a bind. The European Central Bank's Christine Lagarde emphasized that long-term inflationThe rate at which prices rise across an economy. expectations remain on target at 2%, yet wage growth across the euro zone slowed before the war erupted, providing no buffer if energy costs cascade through labor markets. India's RBI is set to transfer a record 2.87 trillion rupees ($30 billion) to the government, below market expectations, a signal that the central bank is bracing for protracted inflationary pressure. The Philippines BSP has signaled it will need to react aggressively to avoid falling behind the inflation curve.

Commodity markets are split. Copper is trading like an AI stock as investors bet on power demand from hyperscalers offsetting macro headwinds; metals advanced as traders tracked US-Iran ceasefire progress, a tug-of-war that shows no resolution. The $50 trillion safe-haven debt market is in genuine distress: bond traders who loaded long-dated UK gilts at historic discounts to par are now underwater, and Tokyo tankers are scrambling to route shipments away from the Strait of Hormuz.

Bears warn that oil could stay elevated for months if negotiations break down. The consensus estimate of $4.50/gallon at the pump is already crimping consumer spending, even middle-income households are cutting back on dining and entertainment. If oil settles north of $90 and wage growth re-accelerates due to labor market tightness, rate-cut expectations could evaporate entirely, a nightmare scenario for highly leveraged risk assets.