Global markets steady after oil price plunge as Middle East conflict fuels volatility
IEA proposes record emergency reserve release to calm energy markets as investors weigh conflicting signals from Iran war
SRINAGAR — March 11, 2026 — Global financial markets displayed cautious stabilisation on Wednesday following a dramatic pullback in oil prices, though investors remain on edge as conflicting signals from the Middle East conflict continue to fuel uncertainty across asset classes .
Brent crude futures swung between gains and losses to trade 0.2 per cent higher at $87.89 per barrel, while US West Texas Intermediate crude was little changed at $83.47 a barrel, having initially fallen sharply on news that the International Energy Agency has proposed the largest release of emergency oil reserves in its history .
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The pullback in energy prices followed a turbulent session on Tuesday when Brent plunged 11.3 per cent to $87.80 a barrel, just days after it had neared $120 amid fears of sustained disruption to shipments through the Strait of Hormuz, through which approximately 20 per cent of global oil normally flows .
IEA coordinates emergency response
The price retreat gathered momentum as IEA member states convened for crisis talks to assess “the current security of supply” and the potential coordinated release of emergency stocks . In a statement following a Paris meeting of G7 energy ministers, IEA executive director Fatih Birol said he was “in close contact” with energy ministers from key producers and consumers regarding the situation .
The proposed intervention aims to address concerns that the conflict could freeze global energy trade and ignite a sustained price shock—a risk world leaders are scrambling to contain .
However, analysts cautioned that energy markets remain hostage to how long and how intense the conflict becomes. “Several major questions loom over the oil market’s trajectory. Chief among them is the timing of safe passage for vessels through the Strait of Hormuz, a critical chokepoint for global oil supply,” said Kerstin Hottner, Vontobel’s head of commodities .
“Another concern is the possibility of infrastructure damage. Even if major hostilities subside, the prospect of ongoing low-level Iranian drone attacks on energy infrastructure could prolong market instability into next year,” Hottner added .
Conflicting signals from Washington
Market sentiment was further complicated by contradictory messages from US officials. US Energy Secretary Chris Wright posted on social media platform X that the US Navy had successfully escorted an oil tanker through the Strait of Hormuz, stating that “President Trump is maintaining stability of global energy during the military operations against Iran” .
However, Wright quickly deleted the post, and Trump administration officials later clarified that no such escort mission had taken place . A Department of Energy spokesperson said the post was taken down because it was “incorrectly captioned” by agency staff .
The DOE subsequently clarified that Trump’s energy team “are closely monitoring the situation, speaking with industry leaders, and having the US military draw up additional options to keep the Strait of Hormuz open, including the potential for our Navy to escort tankers” .
President Donald Trump issued a stark warning to Iran on Tuesday regarding the strategic waterway. “If for any reason mines were placed, and they are not removed forthwith, the Military consequences to Iran will be at a level never seen before,” Trump wrote on his Truth Social platform .
Asian markets rally, US stocks mixed
Asian equities found some reprieve from the pullback in oil prices, with MSCI’s broadest index of Asia-Pacific shares outside Japan rising 1.6 per cent, while the Nikkei 225 gained 2.1 per cent . South Korea’s Kospi advanced 3.2 per cent, building on strong regional momentum .
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European markets closed firmly higher on Tuesday, with Frankfurt ending up 2.4 per cent and Paris and London each gaining more than 1.5 per cent, helped by a 15 per cent decline in European gas prices that eased concerns over a renewed surge in global inflation .
“Renewed optimism on the back of falling oil prices helped global stock indices recover, most strongly in Asia and Europe,” said Axel Rudolph, analyst at IG trading platform .
However, Wall Street struggled to maintain early gains. The broad-based S&P 500 finished down 0.2 per cent, while the Dow Jones Industrial Average slipped 0.07 per cent. The Nasdaq Composite eked out a 0.01 per cent gain .
US stocks lost momentum after Wright deleted his social media post, which had briefly raised hopes that the Strait of Hormuz was returning to normal operations . Investors also weighed fading hopes for an earlier-than-expected end to the US-Israeli war on Iran against a backdrop of renewed military threats and ongoing worries about economic stagflation .
Indian markets open lower amid sustained volatility
Indian equity benchmarks opened marginally higher but quickly turned negative as geopolitical uncertainty continued to weigh on sentiment . The BSE Sensex was trading 910 points lower at 77,293.92 by mid-session, while the Nifty 50 declined 250 points to 24,011.15 .
The decline followed a relief rally on Tuesday when the Sensex had gained 639.82 points or 0.82 per cent, and the Nifty had risen 233.55 points or 0.97 per cent, after Trump suggested US military operations in Iran could be coming to an end .
Foreign institutional investors remained cautious, selling equities worth Rs 4,672 crore on March 10, while domestic institutional investors purchased equities worth Rs 6,333 crore, providing some cushion to the market .
The rupee weakened 4 paise to 91.89 against the US dollar, reflecting continued safe-haven demand for the greenback amid global uncertainty .
Gulf producers curb output
The conflict has severely disrupted oil production across the Gulf region. Saudi Arabia, Iraq, the United Arab Emirates and Kuwait have together reduced output by approximately 6.7 million barrels per day, equivalent to more than one-third of their combined production capacity, resulting in a 6 per cent reduction in global oil supply .
Saudi Aramco’s chief executive has warned that if the conflict persists, it could have “catastrophic consequences for global oil markets” .
In a significant development, the Trump administration has formally requested that Israel cease further airstrikes on Iranian energy infrastructure, particularly oil facilities. This marks the first time since the US-Israeli joint military operations began that Washington has imposed clear limits on Israeli targeting, underscoring US concerns about energy market destabilisation .
Dollar strengthens as safe-haven demand persists
The US dollar held its gains on Wednesday as investors continued to assess the fallout from the war, with the greenback proving the safe-haven asset of choice in the ongoing market turmoil .
Against the yen, the dollar was up 0.1 per cent at 158.25, while the euro and sterling nursed losses at $1.1624 and $1.3440 respectively .
“You have only one safe asset, which has been the US dollar,” said Frank Benzimra, head of Asia equity strategy and multi-asset strategist at Societe Generale .
“Even gold or Treasuries did not play this huge safe haven role. In the case of Treasuries, because of the inflation concerns, and in the case of gold, because we could see some investors selling their gains in gold to offset some losses in the equity market,” Benzimra explained .
Bond markets have come under pressure over recent sessions on risks that the prolonged spike in energy prices could stoke inflation and cause central banks globally to turn more hawkish .
US Treasuries steadied on Wednesday, with the yield on the benchmark 10-year note little changed at 4.1460 per cent, while the two-year yield was at 3.5796 per cent .
Gold rebounds after recent losses
Gold prices reversed recent declines, with spot gold rising 0.5 per cent to $5,215.60 an ounce . COMEX gold futures had gained 1.86 per cent to $5,198.70 per ounce in Tuesday’s session .
The precious metal had experienced an unusual “safe-haven失灵” (safe-haven failure) earlier in the week, with one market analyst noting that gold’s financial属性 (financial attributes) were overriding its commodity characteristics—high oil prices stoking concerns about further Federal Reserve interest rate hikes, which typically pressure gold prices .
Inflation data in focus
Markets are now turning attention to February US inflation data due later Wednesday, which may offer crucial insight into the path of price pressures and potential central bank responses .
“The general tone of central banks will remain hawkish so long as the threat of the war’s inflationary implications persist,” said Thierry Wizman, global FX and rates strategist at Macquarie Group .
“We would expect that this more hawkish disposition persists even after hostilities end, largely because the data may continue to point to inflationary pressures throughout the period in which inflation may show up in the data,” Wizman added .
European Central Bank President Christine Lagarde emphasised on Tuesday that in the current environment of “extremely high uncertainty and volatility,” the bank cannot pre-commit to a specific interest rate path. She explicitly rejected the notion that the eurozone is entering stagflation, describing the current situation as “fundamentally different” from the 2022 energy crisis .
Global markets are navigating an exceptionally volatile landscape as the Middle East conflict creates cross-currents across asset classes. The proposed IEA emergency reserve release has provided temporary relief, pulling oil prices back from recent highs and enabling equity markets to stabilise. However, with the Strait of Hormuz effectively closed to commercial traffic, Gulf producers cutting more than six million barrels per day of output, and conflicting signals emerging from Washington and Tehran, the underlying tensions remain unresolved.
Investors are now closely watching US inflation data for signals about central bank policy trajectories, while monitoring diplomatic developments that might indicate whether the conflict will escalate further or move toward resolution. For now, markets remain hostage to events in a region that controls the world’s most important energy chokepoint, with volatility likely to persist until clarity emerges on when—or whether—the Strait of Hormuz will return to normal operations.
SOURCES / INPUTS
Euronews: Oil steady after IEA record reserves proposal
Bloomberg: Oil swings after IEA reserves report
Al Jazeera: Oil prices swing amid mixed Iran war messages
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