Six Months Into Iran War: Oil Markets Defy Doomsday Predictions While Tech and Trade Tensions Dominate Headlines

Markets Shrug Off Six-Month Strait of Hormuz Disruption as Multiple Flashpoints Emerge

Half a year into the U.S.-Iran conflict, financial markets have confounded the most pessimistic forecasts — but a closer look at energy data, trade disputes, and monetary policy signals suggests the situation remains far from settled as of August 28, 2026.

The Oil Picture: Resilient Prices, Troubling Undercurrents

When the Strait of Hormuz — a chokepoint responsible for roughly 20% of global energy flows — effectively closed in late February, many analysts braced for crude oil prices to surge into triple digits. That worst-case scenario has not materialized. Brent crude is currently trading below $90 a barrel, elevated compared to pre-war levels but nowhere near the catastrophic heights that were widely feared.

The volume question, however, remains murky. U.S. Energy Secretary Chris Wright stated last week that more than 8 million barrels per day were flowing out of the Gulf, but shipping tracking data paints a different picture, suggesting throughput closer to 5 million bpd. Asia's notably weak crude import figures for August appear to support the lower estimate. Regardless of which number is accurate, flows remain well below pre-conflict norms.

The more pressing concern may not be crude at all. Refined products — diesel, gasoline, and related commodities — are where market stress is most visible. European diesel profit margins are approaching record highs, and analysts note that tightness in refined product markets could persist well into next year.

Some diplomatic movement did emerge this week. Iran and Oman indicated progress toward a formal agreement on Strait of Hormuz transit controls, and Qatar held senior-level talks with Iranian officials in Tehran on Thursday regarding conditions for normalizing shipping through the waterway. These developments helped nudge oil prices lower earlier in the week.

The backdrop to this diplomacy was U.S. Treasury Secretary Scott Bessent's Monday announcement — dubbed "economic D-Day" — which focused primarily on sanctioning Iranian entities rather than targeting Chinese financial institutions as some had feared. Bessent did issue warnings of secondary sanctions if other nations failed to cut ties with Tehran. Analysts suggest the move toward economic pressure may be influencing Iran's willingness to re-engage diplomatically.

U.S.-Canada Trade Dispute Escalates

Beyond the Middle East, a separate geopolitical flashpoint intensified this week. A previously announced U.S.-Canada trade agreement collapsed last Friday, triggering 50% tariffs on approximately $20 billion worth of Canadian goods — including lumber and dairy products — effective Saturday. Canadian Prime Minister Mark Carney responded with matching "dollar for dollar" retaliatory measures.

The White House escalated further, threatening to impose 50% tariffs on automobiles, trucks, and auto parts beginning next year if no new deal is reached. Given that Canada ranks as America's second-largest trading partner, the dispute carries significant economic weight. Perhaps more consequentially, the breakdown raises questions about the long-term viability of the USMCA — the trilateral trade framework covering the U.S., Canada, and Mexico, which is America's single largest trading partner.

Nvidia Earnings Supercharge AI Sentiment

On the corporate front, chipmaker Nvidia (NVDA) delivered quarterly results that surpassed already elevated Wall Street expectations. The $5 trillion company projected a 70% revenue surge for the coming fiscal year, a figure that underscores the continued intensity of demand for AI-related hardware. Shares climbed nearly 9% on Thursday. The strong print came alongside a report from The Information that Nvidia had agreed to acquire AI platform Hugging Face for approximately $13 billion.

The software sector added to the positive market tone. Salesforce (CRM) raised its full-year revenue and profit guidance while announcing a new integration with AI company Anthropic. Cybersecurity firm CrowdStrike (CRWD) also lifted its annual revenue forecast after beating second-quarter earnings estimates.

Meta Platforms (META) made separate headlines, reaching a settlement with multiple U.S. states over litigation tied to its alleged role in fueling social media addiction among minors. The company agreed to pay up to $18 billion over the next ten years and committed to tighter restrictions governing how teenagers interact with Facebook and Instagram.

Jackson Hole and the Fed's Credibility Test

The Federal Reserve's annual Jackson Hole symposium in Wyoming is underway, and Chair Kevin Warsh faces elevated scrutiny heading into his keynote address. July's PCE inflation index — the Fed's preferred gauge — came in slightly hotter than forecast. Headline inflation rose 0.2% month-over-month (closer to 0.3% on an unrounded basis), exceeding the 0.1% consensus estimate, while the annual rate of 3.7% also topped expectations.

Treasury yields edged higher on the data, with the 10-year note hovering near 4.7%. Treasury Secretary Bessent faced additional criticism this week after investor Stanley Druckenmiller publicly argued that the Treasury's strategy of increasing bond purchases to manage borrowing costs risks undermining institutional credibility.

Warsh, who drew criticism after his last press conference for appearing to cast doubt on the Fed's inflation commitment, is expected to take a measured tone at Jackson Hole and emphasize internal reform initiatives rather than signal any shift in policy direction.

What to Watch

Investors will be monitoring the pace of Strait of Hormuz diplomatic progress, the trajectory of refined product prices, and any developments in the U.S.-Canada trade standoff — particularly regarding the auto sector timeline. Fed commentary from Jackson Hole over the coming days could also influence bond market expectations heading into September.