Market participants woke up to renewed anxiety, with global cues turning cautious. The possibility of escalation—paired with ambiguity over US intentions—has complicated the outlook for risk assets, particularly in emerging markets like India.
According to Andrew Freris, CEO, Ecognosis Advisory, the conflict is unlikely to be resolved anytime soon.
“What I am telling my clients is that this war is going to last not a few months, it is going to last a few years. I will repeat that very slowly, it is going to last for a few years. Not in the way it is now. Not suggesting that in the next five years the United States will carry on bombing. It is not going to end at all. And it is not going to end because both sides are demanding from each other side something that cannot be really offered. In other words, the Iranians will not give up. They will not surrender. And Trump will go around saying that he has won when, in fact, he has not done anything of the kind. To win, you have to have another side that has lost and that other side has not lost, has not lost at all. It is still there very much. Very sad, but that is the way it is.”
Freris cautioned investors against expecting any near-term ceasefire, urging them instead to prepare for a drawn-out period of geopolitical instability.
Oil Shock Fears: Reality vs PerceptionOne of the biggest concerns stemming from the conflict is its potential impact on global oil supply, especially through the strategically vital Strait of Hormuz.However, Freris believes the risks may be overstated.“Let us look at history. What happens when there is a major disruption in the supply of oil or gas? The last one we had was that one between Ukraine and Russia. You know what has happened? The European Union, within a couple of years, has moved its dependency from 40% to 20%, developed different forms of transporting gas to the European Union and therefore removed the threat of Russia. The same thing is going to happen with Hormuz.”
He added that while around a quarter of global oil flows through the Strait, the remaining supply channels are often overlooked.
“We have been told that 25% of all global oil goes through Hormuz. My reaction is, how about the other 75%? Why are we ignoring this? Where is it going? The single biggest producer of oil is the United States. Not one drop of its oil is going through Hormuz.”
While acknowledging that Asian economies reliant on Middle Eastern oil could face disruptions, he dismissed doomsday scenarios.
“To go from the extreme that because Hormuz is closed, the rest of it were going to die, this is gross exaggeration. I am sorry. I would say I am quite upset. I am not upset at all about the things, not because I know better, but because I know different.”
A Fragmented Global ImpactOn the broader economic fallout, Freris challenged the very notion of a uniform “global economy,” arguing instead for a fragmented impact across nations.
“Look, there is no such thing as world economy. Let us forget about this. There are individual countries. Individual countries are going to be affected in very different ways.”
He pointed to China as an example of resilience, citing its large oil reserves and rapid transition away from fossil fuels.
“China, for example, is going to be impacted very little. Not only because it has a very large amount of oil in reserves, but also because it has moved incredibly fast to move away from its dependency on carbon fuel.”
A Crisis That Could Accelerate ChangeIn a contrarian take, Freris argued that the long-term consequences of the conflict could, paradoxically, be positive—particularly in accelerating the global shift away from oil dependence.
“The most important impact of this war is going to be extremely beneficial. I will say that very slowly, sounds very cruel to say that war can be beneficial. It will be because it is going to shake up the rest of the world to move away from its dependency on oil.”
He highlighted transportation as the primary driver of oil demand and pointed to the rapid adoption of electric vehicles, particularly in China, as a sign of what lies ahead.
Food Security and Fertiliser DynamicsAddressing concerns around food inflation and fertiliser shortages, Freris dismissed fears of a systemic crisis.
“Fertilisers are used to grow plants. Plants require different amounts of fertilisers, which means that if you run short of a particular kind of fertiliser, then you can always substitute it with a different plant.”
He illustrated this with crop substitution trends, noting that lower fertiliser availability could shift production patterns rather than halt them entirely.
“So, wheat, for example, uses a lot of fertiliser. Maize uses relatively less. Soybeans use relatively less, so does rice. Which means that if you run short of fertiliser, you do not stop producing wheat. You produce less wheat and more rice.”
Highlighting current price trends, he added:
“Rice is one of the key inputs into food in Asia and so far the prices of rice are the lowest in a decade. I will say that slowly, the lowest in a decade. Nonsense that there is a shortage of rice. There is not.”
Bottom Line for MarketsAs geopolitical tensions persist, the message from experts is to brace for a long haul rather than a quick resolution. While near-term volatility in oil prices and equities is inevitable, structural shifts in energy consumption and supply chains may ultimately redefine the global economic landscape.
For investors, the challenge lies not just in navigating immediate uncertainty, but in recognising the deeper transformations that such conflicts tend to accelerate.
