US oil shield may not be sustainable as Iran war escalates

Oil is rising as geopolitical tensions rise, but the CEO of one of the world’s largest independent financial advisory organizations warned that assumptions that the US will be spared the fallout are now being tested.

Brent crude has climbed above $113 a barrel as threats to energy infrastructure and key shipping routes increase.

In response, global equity markets fell sharply, with losses in Europe and Asia. US benchmark WTI has risen more modestly, lending credence to the view that the US faces less risk of immediate supply disruption.

Yet the widening gap between global and US oil prices may hide a deeper vulnerability.

Nigel Green, CEO Deavere GroupWarns: “Although the US appears safer at first glance, it is far from immune if the crisis escalates.

“The divergence between Brent and WTI suggests that the US is less directly affected by supply shocks, and this is true to some extent,” he says. “But investors shouldn’t mistake relative insulation for immunity.”

The US remains the world’s largest oil producer, with most of its supply produced and stored domestically. This reduces dependence on seaborne imports and limits exposure to choke points such as the Strait of Hormuz.

However, Deavere’s chief executive emphasizes that the US economy is deeply linked to global demand and capital flows. These factors can immediately impact any home energy gains.

“A significant portion of US assets are owned by foreign investors, and the economy depends heavily on global trade. If the shock spreads and global growth weakens, the US will feel it.”

The current market reaction reflects a fragmented shock, with energy-importing sectors facing the most immediate pressure. High oil and gas prices are already weighing on European and Asian markets, raising inflation risks and threatening growth.

But Nigel Green suggests that the second phase of the crisis may be felt more widely.

“If this turns into a deep global recession, the idea that the US can remain untouched is much less credible,” he explains.

“Demand has weakened, capital has shifted, and financial conditions have tightened across borders.”

Rising US yields are another emerging concern. As borrowing costs rise, they put pressure on an economy already struggling with elevated inflation expectations and geopolitical uncertainty.

“Higher yields reflect tighter financial conditions at a time when risks are rising. This combination could quickly become a problem if confidence begins to change.”

Currency markets, often a source of strength during periods of stress, can also become more complex.

“Although the dollar generally benefits from safe-haven flows, continued global disruption could alter capital allocation patterns, especially if foreign investors reevaluate the riskiness of US assets.”

At the same time, geopolitical dynamics remain highly unpredictable. US President Donald Trump has warned of further escalation, including possible attacks on Iranian infrastructure, while Iran has indicated it will respond by targeting critical facilities across the region.

This creates a strategic impasse with significant market implications.

“The US administration needs a solution to stabilize markets, but Iran understands the pressure,” he says.

“This dynamic increases the risk of long-term stress rather than quick stress reduction.”

Investors are now focused not just on where the initial impact is strongest, but also on how far the shock might spread.

Nigel Green concluded: “America’s early resilience should not lead to complacency.”

“This is a global system, and if tensions increase, the impact will be shared more widely.

“The question is not whether the US starts out from a stronger position; it does, but realistically how long that advantage can last.”

Research oil and gas stocks on Investorideas.com’s free stock directory

https://www.investorideas.com/OGSN/stock_list.asp

Research Natural Gas and Helium Stocks on Investorideas.com

https://www.investorideas.com/Companies/NaturalGas/Stock_List.asp