U.S. stock indices rose, while international crude oil prices plunged sharply amid 'potential U.S.-Iran negotiations' and 'TotalEnergies’ bearish outlook on oil'; gold volatility increased—has market expectations shifted again?

Last night’s overnight movement in U.S. capital markets gave the impression that 'risk appetite has returned', suggesting that, after a prolonged period of uncertainty regarding liquidity direction, markets are now re-pricing several interlinked factors: the U.S.-Iran conflict, energy supply, inflation, and the trajectory of U.S. interest rates. At the same time, markets appear to be holding back full reactions pending the upcoming PCE data release and remarks by Fed Chair Jerome Powell—awaiting potential market validation for his recent dovish comments on inflation. As of August 25’s overnight data, all three major U.S. stock indices posted gains: the Dow Jones Industrial Average rose 0.30%, the S&P 500 gained 0.32%, and the Nasdaq Composite climbed 0.66%. Meanwhile, WTI crude fell 3.1% to USD 82.36 per barrel, and Brent crude dropped 3.9% to USD 88.58 per barrel. U.S. Treasury yields continued declining, and the U.S. dollar weakened slightly. Global financial markets remain locked in a pattern of large-scale, pulse-like swings—extremely volatile both upward and downward. Below, we briefly unpack this. (1) Crude oil fell on 'war premium repricing'; U.S. equities rose on 'rate-trade sentiment' Two immediate triggers drove the sharp drop in international oil prices: First, markets renewed bets that the U.S. and Iran may pursue diplomatic negotiations or economic pressure as alternatives to military escalation. Though the news originated from Middle Eastern media—and consisted only of anonymous, 'close-source' commentary—markets have grown accustomed to pricing such fluid, speculative variables. Second, Iran and Oman reportedly discussed establishing a dedicated security corridor through the Strait of Hormuz, excluding the U.S. and other external powers, with Iran assuming direct management authority. Simultaneously, U.S. policy priorities appear to have shifted away from immediate military expansion toward intensified economic sanctions and financial pressure. In effect, markets are pricing in a lower probability of conflict escalation and a higher likelihood of restored energy transportation—at least a reduced risk of hot-war pressure emanating directly from the U.S. Moreover, TotalEnergies’ CEO delivered another blow to oil sentiment last night, stating that an increasing number of tankers worldwide are resuming transit through the Strait of Hormuz. The company even characterized the near-term oil market outlook as weak, citing Persian Gulf producers actively reintroducing inventory into the market. Weekly vessel transits through the strait have already risen markedly. Yet this statement reignited market debate over the 'true flow volume' through the Strait of Hormuz—a puzzle compounded by stark discrepancies among U.S., European, and private market estimates: U.S. official figures hover around 8 million barrels per day (bpd), whereas most independent market estimates range between 2–5 million bpd, with upper bounds rarely exceeding 6 million bpd. This divergence likely stems from widespread AIS transponder shutdowns by tankers, enabling them to 'go dark' and transit the strait covertly at night. In theory, military radar data may be more accurate—but maritime insurance premiums for Persian Gulf voyages have hit record highs. Consequently, the oil market may witness a structural shift where crude oil price pressures 'cede ground' to refined product prices: gasoline and diesel prices could sustain upward momentum, driven by a 'triple shock'—Russian refinery attacks, heightened shipping risks in the Persian Gulf, and Red Sea disruptions. Thus, when WTI dips below USD 80 per barrel again, it signals a decline in war-related risk premium—not the complete disappearance of supply-side risks. And falling oil prices benefit U.S. equities, as they directly ease the market’s greatest concern: the 'conflict → energy → inflation → Fed' transmission chain. After all, the gravest danger posed by rising oil prices isn’t just higher energy stocks—it’s the re-ignition of U.S. inflation expectations, which could force the Fed to maintain elevated interest rates—or even restart rate-hike deliberations.

How should multinational corporations adjust their strategies and tactics in response to the escalating and potentially protracted U.S.-Israel-Iran conflict since March 2026?

So how are the above-mentioned types of enterprises responding to the escalating U.S.-Israel-Iran conflict—which began intensifying in March 2026 and now appears increasingly likely to persist long-term? How have their multinational operational strategies and tactics in the Middle East been adjusted? Here, we focus specifically on the practices of multinational oil companies. First, non-core operational personnel have been evacuated, retaining only minimal presence in Gulf states and Iraq to ensure personnel safety. Reports indicate that Western multinational oil companies have fully withdrawn their home-country staff from these countries; production and operational tasks are now delegated to local employees or third-party international contractors. In contrast, major Chinese oil enterprises have opted to keep only the leanest, most mission-critical Chinese teams on-site. Most international contractors, service providers, and small-to-medium-sized private enterprises have chosen to remain locally, positioning themselves to resume operations immediately once the situation stabilizes. Second, in close coordination with host governments, wells have been swiftly and orderly shut-in and production suspended—while maintaining the minimum output level required to meet the oilfield’s own energy needs. As introduced earlier in this article by Qingquan, many large Middle Eastern oil and gas fields are operated under joint ventures or joint operating agreements led by multinational oil companies. In emergencies, these operators follow host-government directives on production cuts, shutdowns, or restarts—and this crisis is no exception. However, the current shutdowns triggered by Strait of Hormuz disruptions are exceptionally severe: Iraq’s output has plummeted from 4.3 million bpd pre-war to just 0.8–1.2 million bpd (a drop exceeding 80%); the UAE’s output has fallen from 3.5–4.0 million bpd to under 1.8 million bpd (a decline of over 50%); and Kuwait’s output has collapsed from 2.8 million bpd to roughly 0.5 million bpd—effectively halting operations altogether. Third, multinational oil companies are assisting host governments in identifying alternative export routes for oil and gas, aiming to minimize losses from disrupted exports and sales. Key initiatives are underway in Saudi Arabia, the UAE, and Iraq. Saudi Aramco operates the 1,201-kilometer-long, dual-line East-West Pipeline across Saudi Arabia, with a capacity of 7 million bpd. This pipeline has played a critical role during the current crisis: oil exports via Saudi Red Sea ports now exceed 4 million bpd. ADNOC—the UAE’s national oil company—alongside international oil companies and contractors operating there, is urgently maintaining the Habshan–Fujairah pipeline, a vital lifeline with a capacity of 1.5 million bpd. In Iraq, efforts are intensifying to boost throughput on the Kirkuk–Ceyhan pipeline running from northern Iraq through the Kurdistan Region to Turkey. BP—the operator of the Kirkuk field—is reportedly coordinating closely with the Iraqi government to ramp up flows on this pipeline, which has a nominal capacity of ~1.1 million bpd but currently transports only about 250,000 bpd—far too little to meaningfully offset Iraq’s losses.

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TotalEnergies forecasts global oil demand will peak between 2035 and 2040, potentially declining sooner due to electric vehicle growth. Geopolitical crises like the Iran conflict could accelerate the energy transition through increased EV sales and biofuel blending.

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