MW Why a 1980s conflict may be the best market analog for the current Iran situation

By Steve Goldstein

The so-called 'tanker war' disrupted traffic and lifted oil prices

The American navy frigate USS Stark was hit by two Exocet missiles fired from an Iraqi Super-Etendard fighter during the Iran-Iraq war.

It's entering the second week of the U.S.-Israeli war on Iran, and traders are growing restless. After the volatility of the first few days, oil is rising once more to triple-digit levels, while the S&P 500 SPX has slipped 3% since the incursion.

"For now, sentiment remains resilient, expecting a short lived conflict. So if the closure of Strait of Hormuz gets prolonged and oil sustainably breaches $100/b, market confidence in a 'Trump put' may increasingly come under pressure," say strategists at Barclays led by Emmanuel Cau. The term Trump put refers to the idea the Trump administration could put a floor under U.S. stock prices through policy action - in this case, by ending the war.

Citi's global macro strategy team led by Dirk Willer went in search of historical analogs, looking through the last five oil crises. While the natural inclination is to draw comparisons to the 1970s - the Yom Kippur war of 1973 and the Iranian revolution of 1979 - the strategists say they don't quite fit.

"The oil price had been pegged for many years," they say. "Pegs usually suppress volatility, which then comes into the open in a hurry, when the peg breaks, partly because many market participants banked that the peg would last when drawing up their business plans. A breaking peg is therefore more disruptive, than the adjustment in a flexible market," they say. Add in fact the U.S. is now a net exporter, as well as the global economy's reduced reliance on oil, and the two situations are not that comparable.

The last time the Strait of Hormuz saw tanker traffic severely disrupted was in the 1980s, during the so-called tanker war between Iran and Iraq. Traffic fell as much as 20%, prompting U.S. Naval escorts. That does tend to rhyme a little more with the current day. A look at the chart tells the story - oil prices peaked when a U.S. ship hit a mine in July 1987, while the S&P 500 managed to advance through the oil-price move, even as that period includes Black Monday.

The strategists are still cautious in their asset allocation recommendations.

"In the end, we need volatility to come off before committing more capital," they say. They said it was noteworthy that the oil market did not respond more positively to the International Energy Agency-led global supply release.

Comparing now and the pre-war situation, the strategists pointed out the biggest moves so far by global investors has been to reduce their overweights in the Kospi index KR:180721 of South Korean stocks and the FTSE 100 UK:UKX index of U.K. equities. At the same time, investors are now less underweight the Nasdaq index QQQ of top tech stocks, and more underweight the Russell 2000 RUT index of U.S. small-cap stocks. That fits logically - it's indicative of an unwind of the broadening trade of earlier quarters, they say. Their advice is to stay overweight U.S. equities but said they are no longer overweight U.S. small caps.

The market

U.S. stock futures (ES00) (NQ00) wobbled between gains and losses overnight. Crude (CL00) was rising.

   Key asset performance                                                Last       5d      1m      YTD     1y 
   S&P 500                                                              6672.62    -2.31%  -2.34%  -2.53%  20.85% 
   Nasdaq Composite                                                     22,311.98  -1.92%  -1.26%  -4.00%  28.95% 
   10-year Treasury                                                     4.273      14.00   22.10   10.10   -4.40 
   Gold                                                                 5097.1     -1.63%  0.66%   17.66%  70.27% 
   Oil                                                                  95.07      4.16%   51.36%  65.60%  41.49% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Fighting continued in the Middle East, with Iran attacking its Middle Eastern neighbors, including Turkey for the third time. The U.S. Treasury is providing a temporary authorization to permit countries to purchase Russian oil currently stranded at sea.

A busy economics slate includes the January personal consumption expenditure price index, the second estimate of fourth-quarter GDP, and January durable-goods orders, all at 8:30 a.m. Eastern. At 10 a.m. comes January jobs openings and the March University of Michigan consumer-sentiment index.

Adobe $(ADBE)$ reported slowing annualized recurring revenue and the intended departure of its CEO of 18 years.

Shares of Ulta Beauty slid after hours on Thursday after the cosmetics retailer forecast a profit and same-store sales for this year that were below Wall Street's estimates.

Jennifer Garner's Once Upon A Farm $(OFRM)$ slumped in premarket trade as the organic snack food maker forecast slowing growth.

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The chart

From the same Barclays note referenced earlier, here's a chart of retail investor sentiment. Strategists said sentiment has softened, but not collapsed to levels typically associated with deep sell-offs. "Our recent client conversations echo this tone, with most investors adopting a wait and see stance with some downside hedge buying rather than capitulating," they said.

Top tickers

Here were the most active stock-market tickers as of 6 a.m. Eastern.

   Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   TSM     Taiwan Semiconductor Manufacturing 
   GME     GameStop 
   AAPL    Apple 
   PLTR    Palantir Technologies 
   NIO     Nio 
   AMZN    Amazon.com 
   ADBE    Adobe 
   AMD     Advanced Micro Devices 

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BEYOND THE NEWSROOM

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March 13, 2026 06:40 ET (10:40 GMT)

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