The Middle East conflict is causing market fatigue. The situation involving Iran is developing in unexpected ways. According to the latest reports on the afternoon of the 19th, Iran's Nour News stated that the Iranian Ambassador to the United Nations, in a letter to the UN Secretary-General, indicated that the United Arab Emirates bears compensatory responsibility for "allowing the U.S. to launch airstrikes against Iran from its territory." Separately, a spokesperson for the Israel Defense Forces said on the 18th that the military would not cease its "series of targeted operations" against senior Iranian officials. On the same day, Israel's Defense Minister stated that he and the Prime Minister had jointly authorized the military to strike "any senior Iranian official" without prior approval, declaring that "all Iranians are targets."
Simultaneously, the latest Yahoo/YouGov poll results show that the Iran conflict, which has triggered a sharp rise in U.S. oil prices, is beginning to cause a chain of political reactions domestically in the United States. Approximately two-thirds (66%) of American respondents expressed disapproval of how the U.S. is handling oil prices.
Today, markets across the Asia-Pacific region fell, while international oil prices continued their significant rise. Citigroup indicated that Brent crude prices are expected to climb to $110-$120 per barrel in the coming days. Morgan Stanley, often regarded as a stock market "whistleblower," issued a report advising investors to sell stocks amid this week's market gains and warning that deeper market declines are possible as energy prices surge.
**Iran Situation and Chain Reactions** Reports state that, according to information from the Iranian side, recent attacks by the U.S. and Israel on Iranian medical facilities have resulted in the deaths of at least 18 healthcare workers. The large-scale military actions initiated by the U.S. and Israel on February 28 led to the deaths of Iran's then-Supreme Leader and several high-ranking military and political officials in airstrikes. Iran subsequently launched counterattacks against Israel and U.S. military bases in the Middle East.
Notably, on March 19, a deputy governor in Iran's Lorestan Province stated that the death toll from an attack by the U.S. and Israel on a residential area on the 18th had risen to 12, with 116 others injured.
Furthermore, on the 19th, the Israel Defense Forces reported that Iran had launched its fifth ballistic missile attack against Israel since midnight. There were no immediate reports of casualties or significant impact. The Israeli military stated the missile carried a cluster munition warhead and hit an open area.
According to Iran's Nour News, the Iranian Ambassador to the UN, in the letter to the Secretary-General, asserted that the UAE is liable for compensation due to permitting U.S. airstrikes from its territory.
The conflict with Iran has triggered a substantial increase in U.S. oil prices, sparking a chain of political reactions within the United States. A Yahoo/YouGov poll conducted from March 12-16 revealed that about two-thirds (66%) of American respondents disapprove of the government's handling of oil prices, with only 27% approving. Disapproval of the government's approach to managing the cost of living was also high at 67%, with only 26% approving. Overall, public approval of the U.S. government's economic management fell 5 percentage points from the previous month (from 37% to 32%), while disapproval rose 4 points (from 57% to 61%).
The poll showed 80% of respondents believe gasoline prices are too high, 67% expect prices to rise further in the coming months, and 45% of Americans anticipate a significant increase. Even among Republican supporters, more believe gasoline prices will rise (about 45%) than fall (40%) in the coming months.
**Morgan Stanley's Unexpected Warning** Following a significant rebound in the previous trading session, major stock indices across the Asia-Pacific region closed lower. Japan's Nikkei 225 fell 3.38%, South Korea's KOSPI dropped 2.73%, and Australia's S&P/ASX 200 and New Zealand's S&P/NZX 50 indices both declined nearly 2%.
Morgan Stanley published a report advising investors to sell stocks during this week's rally in Asian markets, warning of potential deeper declines as energy prices spike. The report noted that Brent crude prices are approaching the bank's adverse scenario forecast of $120-$130 per barrel and that Asia is more vulnerable to oil and LNG supply disruptions compared to other regions. Under an adverse scenario, Asian markets could fall into bear market territory, declining a further 15% to 20% from current levels.
Morgan Stanley stated that Asia is also susceptible to disruptions in the supply of raw materials needed for agricultural and industrial production. Additionally, signals that interest rates might remain unchanged in a potential stagflation environment present another negative factor dragging on Asian markets.
Citigroup's latest report pointed out that against the backdrop of escalating Middle East conflict and heightened risks of energy supply disruptions, international oil prices could rise sharply in the short term, with Brent crude expected to reach $110-$120 per barrel in the coming days. The bank believes markets will continue to push prices higher until they reach a level that forces political or strategic intervention.
The report, led by Citigroup's Global Head of Commodities Research, indicates that in an updated base case scenario—assigned a roughly 50% probability—supply disruptions caused by the conflict are assumed to last 4 to 6 weeks, potentially impacting 11 to 16 million barrels per day. Citigroup suggests that as the conflict persists in the coming days, Brent prices could rebound into the $110-$120 range, and markets will likely continue rising until prices trigger a policy response.
The report notes that once prices reach a certain threshold, various policy or market reactions could occur. These include the U.S. potentially halting military operations, more aggressive releases of strategic petroleum reserves by the International Energy Agency and OECD member countries, or major global powers being compelled to act to reopen critical energy transit chokepoints like the Strait of Hormuz.
Citigroup also warned that the risk of further escalation remains significant. In an optimistic scenario, assigned about a 30% probability, where Iranian attacks expand to target more energy infrastructure or the Strait of Hormuz remains effectively closed by June, Brent prices could rise to $150 per barrel, or even reach $200 under a combined extreme scenario.
Conversely, in a pessimistic scenario—given about a 20% probability—where the U.S. and Iran quickly reach an agreement and reopen the Strait of Hormuz, global energy supply pressures would ease significantly, and oil prices could fall back to the $65-$70 per barrel range by year-end.
Beyond the crude market, Citigroup expressed optimism about aluminum price prospects. The bank pointed out that global aluminum inventories are currently relatively low, and tensions in the Middle East could lead to production cuts at some smelters in the region, potentially reducing global aluminum supply by approximately 6% and further driving up prices.
On March 19, at a spring capital market forum, an analyst from CITIC Securities stated that based on the Government Work Report combined with recent statements and measures from the China Securities Regulatory Commission, stabilizing the market and fostering a long-term investment ecosystem have become essential requirements for the high-quality development of the capital markets. The analyst believes that precisely because of this solid underlying logic reshaping, the global appeal of Chinese assets continues to rise. Driven by both fundamental economic recovery and the influx of incremental funds, the A-share market is transitioning from a phase of存量博弈 (存量博弈) to a critical period of增量配置 (增量配置), with a new, more resilient, and stable capital market ecosystem already taking shape.