Iran War Impact - SocGen: Oil Price Up $20 But Impact More Controllable, Gold Still Most Effective Hedge

French Industrial Bank strategist Manish Kabra said that the new geopolitical oil impact related to the conflict with Iran could push up crude oil prices in the short term, but the broader economic impact may be more controllable than previous events. Over the past fifty years, the world has experienced five major oil supply shocks, with oil prices usually remaining high for about three months, after which the long-term impact depends on the policies of the Federal Reserve and the global economic growth cycle. Of the three shocks - the most significant being those in the 1970s - they coincided with the Federal Reserve's aggressive tightening policies and triggered or exacerbated economic recessions in the United States. In contrast, the last two shocks occurred during stronger economic situations, resulting in lesser damage to the macro economy. The French Industrial Bank stated that the current surge in oil prices includes an estimated geopolitical risk premium of $8 per barrel, which is likely only temporary, on the condition that the Strait of Hormuz remains open, and global buffer measures such as OPEC+ remaining production capacity, China's strategic reserves, and potential stock releases from the International Energy Agency can stabilize supply sentiment. Temporary supply disruptions could lead to a $10-20 per barrel increase in oil prices, while more serious risks - including export losses or a temporary closure of the Strait of Hormuz - could further increase oil prices by 20-25 dollars per barrel. An extreme scenario of oil prices approaching $150 per barrel is considered highly unlikely. Sustained oil price shocks (of $20 per barrel) could increase global inflation rates by up to 1 percentage point and cause a decrease in global GDP of around 0.1 to 0.2 percentage points, with Europe and Asia being most affected. Major central banks may initially overlook this temporary surge in oil prices, but continued strength in oil prices could delay the implementation of loose policies. Despite the risks, the French Industrial Bank believes that this shock is occurring during a relatively stable economic period, with economic growth expanding, fiscal support still in place, and private investment trends (including repatriation, investments in power infrastructure, and artificial intelligence spending) providing momentum. The bank stated that gold remains the most effective hedge tool for investors, pointing out that gold usually performs well during oil shocks, and in sustained fiscal expansion, gold can be a stable diversification investment tool. Previously, Goldman Sachs also released a research report stating that the Strait of Hormuz typically carries one-fifth of global crude oil and liquefied natural gas supplies, and it seems to have suffered significant disruptions. With multiple reports of damaged ships, many freighters, oil producers, and insurance companies have turned cautious. The bank is assessing the upward risks to energy prices brought on by developments in the Middle East situation. Currently, energy price forecasts based on the assumption of no sustained supply disruptions remain unchanged. Based on a 15% increase in weekend retail oil prices, Goldman Sachs estimates an immediate risk premium of $18 per barrel, roughly equivalent to the impact of a six-week full shutdown of the Strait of Hormuz on fair value, considering that spare pipeline capacity can partly offset the impact. If only 50% of the flow is interrupted for a month, this estimated impact will ease to a $4 per barrel increase. However, if market demands a premium for the risk of more prolonged supply interruptions, oil prices could rise significantly.