Investors need to brace for higher-for-longer interest rates after Middle East conflict shocks oil market

The conflict involving Iran is creating a permanent, structurally elevated inflation floor globally, ending the era of cheap money that characterized the post-2008 period. This shift is driven by the realization that global energy markets are fragile, leading nations to prioritize energy independence and security over cost efficiency. Energy expert Anas Alhajji suggests this will trigger a de-globalization of energy markets, mirroring a Chinese approach with heavy state direction, stockpiling, and vertical integration, which will result in fragmented markets, slower innovation, and higher costs for Western economies.

This persistent inflation means central banks will lack the room to deploy ultra-easy monetary policies, such as near-zero interest rates and quantitative easing, that previously fueled massive asset gains across stocks, bonds, and crypto. The fallout extends beyond oil to essential supplies like fertilizers, food, and even chipmaking components. Consequently, investors must prepare for a new normal defined by sticky inflation, less accommodative monetary policy, and increased market volatility, as liquidity support will be constrained.

(Source：CoinDesk)