The market is concerned about the interruption of oil flow due to the US-Iran conflict, not just because crude oil prices have risen again. The real issue affecting the pricing of stocks, bonds, and crypto assets is whether the energy supply shock will reignite inflation, forcing the Federal Reserve to maintain high interest rates or even consider tightening policies further.
In July 2026, US-Iran military conflicts escalated again, causing a significant drop in ship traffic through the Strait of Hormuz, while the Red Sea route also faced threats of an expanded blockade by Houthi forces. Brent crude oil rose above $93 per barrel on July 22, nearing a six-week high. For the stock market, the core issue has shifted from how long the conflict will last to whether corporate profits and valuations can withstand the combined pressures of higher energy costs, rising bond yields, and weaker consumer demand.
If the interruption of oil flow is merely a short-term event, the stock market may continue to rely on the earnings of technology companies and investments in artificial intelligence to maintain resilience. If the interruption lasts for several weeks or even longer, investors will have to reassess the combination of inflation, interest rates, and global growth, and the pricing foundation for risk assets may also change.
Key Points
The US-Iran conflict has clearly compressed the oil and gas transport capacity of the Strait of Hormuz, with some oil tankers suspending transit or changing routes.
Brent crude oil rose to $93.85 per barrel on July 22, 2026, while West Texas Intermediate crude rose to $87.27.
Before the conflict, the Strait of Hormuz carried about one fifth of the world's oil supply and is one of the most important transport nodes in the global energy market.
The core issue facing the stock market is not the one-day rise in oil prices, but whether the energy shock will reignite inflation and raise bond yields.
Sectors such as aviation, transportation, chemicals, retail, and high-valuation technology stocks may face increased pressure, while energy, defense, and some commodity companies could benefit relatively.
Bitcoin may be temporarily affected by the sell-off of risk assets, and cannot simply be viewed as a stable safe-haven asset in a war environment.
Investors should next focus on actual oil flow, tanker insurance, US inflation expectations, US Treasury yields, and corporate earnings guidance.
The Interruption of Oil Flow in Hormuz is Moving from Risk Scenario to Reality
The market impact of the US-Iran conflict is no longer limited to military actions themselves. With the US restoring its maritime blockade against Iranian-related shipping and Iran continuing to target in the Gulf region, the commercial ship traffic through the Strait of Hormuz has significantly declined.
According to Reuters tracking of shipping in the Strait of Hormuz, only three commodity transport ships passed through the Strait on July 16, setting a record low for a single day since May. On that day, there were no ultra-large crude carriers or liquefied natural gas carriers completing transit, and some oil tankers suspended operations or turned back near the Gulf of Oman.
This means that the market's concerns are no longer limited to whether Iran will officially announce the closure of the Strait, but whether ship owners, insurance companies, and energy traders have proactively reduced transit due to safety risks.
The Reduction in Vessels Itself Can Create Supply Shock
The Strait does not need to be completely blocked for global oil flows to be significantly affected. As long as ship owners perceive an increased risk of attacks, seizures, or military misjudgments, oil tankers may delay departure, change routes, or demand higher transportation fees.
Insurance companies may also raise war risk premiums, shorten underwriting periods, or refuse to provide coverage for certain high-risk voyages. The end result is that even if oil fields are still producing, crude oil may not be able to reach refineries on schedule.
Therefore, supply shocks may first manifest in transportation timing, spot premiums, and refining raw material structures, and only later reflect in official export data.
The Red Sea Route Faces Additional Pressure
Risks are not limited to the Strait of Hormuz. Houthi forces in Yemen threaten to impose a maritime blockade on Saudi-related ships and may disrupt shipping near the Bab-el-Mandeb Strait.
AP News reports on Houthi maritime threats indicate that the Bab-el-Mandeb Strait carries about 12% of global trade. Even if Houthi forces cannot completely block the route, sporadic drone, missile, or mine attacks could force ships to reroute around the southern tip of Africa.
If both the Strait of Hormuz and the Bab-el-Mandeb Strait are constrained simultaneously, Middle Eastern energy exports will face transportation pressures from both the East and the West. The global market will no longer just need to consider temporary disruption in a single Strait but will have to reckon with a correlated disruption across the entire Middle Eastern energy logistics network.
Rising Oil Prices are Changing the Macroeconomic Assumptions of the Stock Market
According to Reuters energy market report on July 22, Brent crude rose 3.12% to $93.85 per barrel, while West Texas Intermediate crude rose 3.47% to $87.27, both reaching the highest levels since June 11.
Rising oil prices do not necessarily lead to a bear market in stocks. The real determinant of market direction is how long oil prices remain at high levels, the scale of supply disruption, and whether companies and consumers can absorb the added costs.
The Market Previously Relied on the Logic of Cooling Inflation
One of the key supports for the stock market previously was the gradual decline in US inflation, allowing the Federal Reserve to halt interest rate hikes and retain the ability to cut rates after economic slowdown.
Energy supply shocks could undermine this logic. Rising crude oil prices will first affect gasoline, diesel, and jet fuel, and then pass through logistics, plastics, chemicals, agriculture, and manufacturing costs to a broader range of goods and services prices.
If investors start to believe that energy inflation is persistent, the bond market may increase long-term inflation compensation, and US Treasury yields may rise accordingly. High-valuation stocks will face pressure not only from downward adjustments to profits but also from contractions in valuation multiples.
High Oil Prices May Create an Environment of Stagflation
The most unfavorable combination for the stock market is not just a rise in oil prices, but a simultaneous rise in oil prices that weakens consumption and corporate profits.
Households may need to allocate more income to fuel, electricity, and transportation, potentially reducing other discretionary spending. Corporations may need to choose between raising prices, shrinking profit margins, and cutting costs.
This environment may create mild stagflation pressures. Economic growth slows, but inflation fails to drop quickly, making it difficult for the Federal Reserve to provide support through rate cuts. This combination is particularly adverse for stocks that have already reflected relatively high growth expectations.
The Core Issue for the Stock Market is Whether Earnings Can Offset Valuation Pressure
The real test of the US-Iran conflict for the stock market is whether corporate profit growth can continue to outpace the rise in financing costs and input costs.
The ability of some major indices to withstand geopolitical shocks previously was due to the strong earnings of large tech companies, ongoing growth in AI capital expenditure, and resilient banking performance. However, if oil prices remain above $90 per barrel, the market will need to reassess whether these positives can continue to offset macro pressures.
Technology Stocks Cannot Escape the Interest Rate Environment
Large technology companies are generally not seen as direct victims of crude oil costs, but their valuations are highly sensitive to long-term interest rates.
If energy prices increase inflation expectations, the market may reduce bets on rate cuts, and the ten-year US Treasury yield may rise. An increase in the discount rate for future cash flows will directly lower the theoretical value of high-valuation tech companies.
AI infrastructure also requires substantial data centers, power, copper, natural gas, and cooling equipment. Rising energy costs will not only affect valuations, but may also raise the actual costs of AI capital expenditure.
Thus, whether tech stocks can continue to lead the market will depend on whether profit growth is sufficient to cover higher discount rates and infrastructure costs.
Cyclical Industries Face Profit Margin Challenges
Aviation, shipping, logistics, automotive, chemicals, and industrial enterprises are sensitive to fuel and raw material prices.
Some companies can pass on costs through fuel surcharges or price adjustments, but such transmission usually involves time lags. In highly competitive or weak demand industries, it may be difficult to pass all costs on to customers.
Retail and consumer services companies may also face indirect impacts. When household energy and transportation expenditures rise, spending on dining, travel, entertainment, and non-essential goods may get compressed.
Rising Energy Stocks are Not without Boundaries
Rising oil prices typically benefit upstream oil producers and certain oilfield service companies. Improved cash flow may support dividends, stock buybacks, and capital expenditures.
However, if rising oil prices ultimately trigger a global economic slowdown, energy demand expectations will also decline. Refiners, petrochemical firms, and companies heavily reliant on specific routes may face pressures due to mismatches in raw materials and logistics.
Therefore, the energy sector may become a relative winner in the short term, but it does not mean that all energy-related stocks will benefit simultaneously.
Different Markets and Industries Will Exhibit Obvious Divergence
Energy shocks will not affect all countries and assets equally. Dependence on crude oil imports, currency stability, fiscal subsidy capacity, and industrial structure will determine the actual impact on different markets.
Asian Oil Importers Face More Direct Pressure
India, Japan, South Korea, and some Southeast Asian economies are highly reliant on imported energy. Rising oil prices may widen trade deficits, increase depreciation pressure on local currencies, and push up domestic inflation.
Reuters coverage of global markets on July 13 indicates that following the escalation of the US-Iran conflict, oil prices rose nearly 9% in a single day, and global stock markets came under pressure, with bond yields rising. The market reaction shows that energy importers face not only rising corporate costs but also potential capital outflows and currency pressures simultaneously.
The Indian market is particularly sensitive to changes in oil prices, as energy import costs directly impact inflation, fiscal spending, and the current account. For governments needing to stabilize fuel prices through subsidies, prolonged high oil prices may further increase fiscal burdens.
The US Market Has Internal Hedging Across Industries
The US is both a major oil consumer and an important oil and gas producer globally. High oil prices will compress consumer purchasing power but may also increase the revenue of shale oil producers and energy service companies.
This gives the US stock market a certain level of internal hedging capability. However, due to the high concentration of weight in major indices in tech and consumer companies, rising energy stocks may not be sufficient to offset the decline in valuations of large growth stocks.
Europe Faces Dual Constraints of Energy Security and Growth
After experiencing the prior gas crisis, Europe has made some adjustments to its energy structure, but it remains sensitive to imported energy and global shipping.
Simultaneous increases in oil prices, natural gas prices, and transportation insurance may raise industrial costs in Europe again. The pressures faced by the automotive, chemicals, aviation, and manufacturing sectors may exceed those faced by similar US companies.
If the European Central Bank needs to balance weak growth and rising inflation, the risk premium for European stocks may rise further.
Investors Need to Track Which Leading Indicators
Military news can trigger short-term price volatility, but what determines the medium-term market direction are quantifiable oil flows, costs, and financial conditions.
Actual Vessel Traffic
The market first needs to observe the daily numbers of crude oil tankers, liquefied natural gas carriers, and refined oil vessels passing through the Strait of Hormuz.
If vessel traffic restores within a few days, the risk premium in oil prices may quickly decline. If traffic remains low for an extended period, even without a formal blockade, supply interruptions may gradually reflect in refinery inventories and spot markets.
Tanker Freight Rates and War Risk Premiums
Freight and insurance costs may reflect supply chain pressures earlier than benchmark oil prices.
If tanker freight rates from the Middle East to Asia or Europe continue to rise, it indicates that physical traders are still paying extra costs for transportation risks. Even if Brent crude temporarily retreats, end-user energy costs may not decline simultaneously.
Crude Oil Term Structure
The degree to which spot prices are higher than futures prices can reflect the market's judgment on short-term supply tightness.
If the front-month contracts' premiums widen, it indicates that refiners and traders are more willing to pay a premium for immediate delivery. Conversely, if futures prices rise but the spot structure does not tighten significantly, some of the gains may be more attributed to risk premiums and financial trading.
US Treasury Yields and Inflation Expectations
The stock market's most critical transmission channel remains the bond market. Investors should focus on two-year and ten-year US Treasury yields, implied expectations of inflation-protected bonds, and the market's repricing of the Federal Reserve's policy path.
If oil prices rise but long-term inflation expectations remain stable, the stock market may digest the shock. If yields and inflation expectations rise simultaneously, the pressure on high-valuation assets will significantly increase.
Investors can track real-time price movements of Bitcoin and major crypto assets via MEXC and assess changes in cross-asset risk appetite in conjunction with oil, the dollar, and stock markets.
Can the Crypto Market Become a Safe-Haven Choice Amid Energy Shock?
The US-Iran conflict and interruption of oil flow will also impact Bitcoin and other digital assets, but the transmission path is not singular.
Bitcoin has a fixed supply cap, thus some investors may view it as an asset that hedges against currency depreciation and long-term inflation. However, in the event of sudden geopolitical shocks, Bitcoin typically still faces impacts from liquidity contractions and sell-offs of risk assets.
Bitcoin is More Closely Associated with High Liquidity Risk Assets in the Short Term
When rising oil prices drive USD, US Treasury yields, and market volatility up, leveraged investors may need to reduce their risk exposure. Bitcoin, being traded around the clock and having high liquidity, often becomes one of the assets investors liquidate quickly for cash.
Thus, at the onset of an escalation in conflict, Bitcoin may fall in sync with technology stocks rather than immediately demonstrating safe-haven properties akin to gold.
Only when the market begins to interpret the conflict as a risk of prolonged fiscal expansion, currency depreciation, or capital controls might Bitcoin's narrative of scarcity regain support.
Demand for Stablecoins May Receive Structural Support
Increased volatility in energy trades, cross-border settlements, and local currency fluctuations may raise the demand for US dollar stablecoins in certain markets.
While stablecoins do not eliminate issuer, reserve asset, and regulatory risks, their all-weather transfer capabilities can provide supplementary channels when traditional banking settlements are restricted. Geopolitical conflicts may thus simultaneously depress crypto asset prices while increasing the demand for stablecoin infrastructure.
Altcoins Face Higher Liquidity Risks
If energy shocks lead to tightening global financial conditions, funds typically prioritize withdrawing from assets with weaker liquidity and valuations that depend on forward narratives.
Bitcoin and Ethereum may attract relatively concentrated funds, but mid and small-cap tokens, leveraged protocols, and high-yield strategies face greater liquidation pressures. Investors cannot assume that just because Bitcoin has potential anti-inflation attributes, the entire crypto market will benefit from geopolitical risks.
MEXC Crypto Pulse Research Team's Exclusive Insights
The real significance of the interruption of oil flow due to the US-Iran conflict lies not in whether Brent crude exceeds $90 on a given trading day, but in the fact that the low-inflation soft landing logic that global markets previously relied upon is now being put to the test in reality.
For some time, the stock market has been able to tolerate war, tariffs, and fiscal risks because investors believed that inflation would eventually fall, corporate earnings would grow, and the Federal Reserve would retain room to lower interest rates. Once energy transportation is long-term disrupted, these three assumptions may simultaneously face challenges. Rising corporate costs, weakened consumer demand, and a narrowing of central bank policy space will ensue.
The market may misinterpret rising oil prices as simply favorable for energy stocks or unfavorable for airline stocks. The true transmission core lies in the bond market. If energy prices do not elevate long-term inflation expectations, the impact of the US-Iran conflict on stock valuations may be limited. If oil prices, inflation expectations, and US Treasury yields rise in unison, even if corporate earnings remain robust, valuations may adjust prematurely.
What investors should focus on next is not the frequency of military actions but the actual shipping volume through the Strait of Hormuz, tanker insurance costs, the Brent crude term structure, and US inflation expectations. These indicators can help determine whether the conflict has transitioned from a news shock to a sustained economic shock.
For the crypto market, the most significant insight is that Bitcoin's macro asset properties are strengthening, but this does not equate to stable hedging. Bitcoin may benefit in the long term from concerns about currency depreciation while simultaneously falling in conjunction with technology stocks during short-term liquidity shocks. Cross-asset investors need to distinguish between long-term scarcity logic and short-term risk exposure, rather than defining Bitcoin with a single label.
Frequently Asked Questions
Why does the US-Iran conflict lead to interruptions in oil flow?
The Strait of Hormuz connects the Persian Gulf to external sea areas and is an important channel for energy exports from Saudi Arabia, Iran, Iraq, Kuwait, Qatar, and the UAE. Military blockades, drone attacks, and vessel safety risks can force oil tankers to suspend passage or change routes. Even if the Strait is not completely closed, rising insurance, freight rates, and delivery times will reduce effective supply.
How important is the Strait of Hormuz to the global oil market?
Before the outbreak of conflict, approximately one fifth of the world's oil supply was transported through the Strait of Hormuz. The region also handles a large volume of liquefied natural gas and refined oil exports. Due to the lack of sufficient alternative pipelines and routes in the short term, any sustained interruption could quickly affect the supply of raw materials to refineries in Asia and Europe and push up global energy prices.
Why do rising oil prices pressure stock markets?
Rising oil prices increase transportation, manufacturing, chemical, and agricultural costs, and reduce the income available for households to spend on other consumption. If energy inflation pushes overall prices higher, the Federal Reserve may delay interest rate cuts, and bond yields may rise. When corporate earnings decline and valuation discount rates increase simultaneously, stock markets usually face greater adjustment pressures.
Which stocks are likely to benefit from rising oil prices?
Upstream oil companies with stable production and low extraction costs, certain oilfield service companies, and energy infrastructure operators may benefit. Defense and some commodity companies may also attract attention from funding. However, if high oil prices ultimately lead to an economic recession, energy demand and corporate valuations may decline, so energy stocks are not without risk.
Which industries are most vulnerable to oil flow interruptions?
Aviation, logistics, shipping, automotive, chemicals, industrial manufacturing, and discretionary consumption industries are generally sensitive to fuel and transportation costs. Asian and European companies with high reliance on energy imports may also face currency pressures. Companies that cannot promptly raise prices or lack long-term fuel hedging may see their profit margins affected more noticeably.
Will oil prices reaching $100 lead to a stock market crash?
Oil prices exceeding $100 do not necessarily lead to a stock market crash. The key depends on how long high oil prices persist, whether economic growth slows, whether companies can pass on costs, and how central banks respond. If oil prices briefly spike and then retreat, the market may quickly recover. If supply disruptions persist and push core inflation higher, stock valuations and earnings expectations may be downgraded simultaneously.
Can Bitcoin act as a safe-haven asset amid the US-Iran conflict?
Bitcoin may gain demand in a long-term environment of currency depreciation and capital flow restrictions, but its short-term performance still highly depends on global liquidity. During an escalation of conflict, investors may sell Bitcoin to reduce risk or supplement margin. Therefore, Bitcoin can sometimes reflect scarcity asset properties, but it is not a stable, non-volatile wartime safe-haven tool.
What should investors pay attention to next?
The most critical points to watch are the shipping volumes through the Strait of Hormuz, the safety situation in the Bab-el-Mandeb Strait, tanker war insurance, the near-term spread of Brent crude, US Treasury yields, and US inflation expectations. If these indicators deteriorate simultaneously, it indicates that the conflict is transitioning into a sustained macro shock. Observing oil prices or stock indices in isolation may not be adequate to gauge risk direction.
Disclaimer
This content is for general information, market research, and educational reference only, and does not constitute any investment, financial, legal, tax advice, trading recommendation, nor does it constitute an offer or solicitation to purchase, sell, or hold any crypto assets, stocks, commodities, or other financial instruments.
Crypto assets, stocks, commodities, and related financial assets are highly volatile, and prices may rise or drop significantly in a short period. Investors may lose part or all of their invested funds. Past performance, market data, analytical views, and price trends do not represent or guarantee future results.
Readers should conduct independent research and verify relevant information before making any investment or trading decisions, taking into account their financial circumstances, investment objectives, experience, and risk tolerance. If needed, consult a qualified independent financial, legal, or tax professional.
The MEXC Crypto Pulse team does not assume any direct, indirect, incidental, or consequential loss arising from reliance on, use of, or interpretation of the information contained in this content. Market data may be subject to delays, revisions, or differences in statistical methodology from third parties, and readers should not make investment decisions solely based on this content.
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