The first quarter of 2026 is in the books. The cautious optimism for the stock market quickly gave way to a clash between geopolitical risk management and asset rotation.
As conflict in the Middle East intensified, hopes of a rate cut turned into an anxiety about a rate hike. Inflation fears return as energy and essential goods surged. Speculative assets sold off alongside overheated commodities as highly leveraged market cashed out winners.
Winners: Energy
The dominant catalyst was the escalation of conflict in the Middle East, culminating in the effective closure of the Strait of Hormuz — one of the world’s critical commodity chokepoints.
The outcome was a massive “risk premium” across energy markets, driving one of the sharpest commodity rallies in recent history.
“Brent oil prices jumped 63% in March, the largest monthly increase in four decades. Beyond energy markets, grain prices also increased given the importance of the Strait for the passage of commodities that are critical in food production,” JPMorgan analyst Zara Nokes wrote in a report.
Heating oil emerged as the standout performer, surging an extraordinary 100% during Q1. Bloomberg Intelligence Senior Commodity Strategist …