ETO Markets Trendwatch ｜Five Lasting Aftershocks of the US Iran War

The fragile ceasefire between the United States and Iran has not eased the broader impact of the conflict. Its shockwaves across global markets and the international order are only beginning to surface.

US Unilateral Dominance in the Middle East Has Weakened

Militarily, the United States and Israel retained tactical advantages, but the conflict failed to achieve Washingtons strategic goal of rapidly reshaping the regional order. Key objectives were not secured, and Iran did not accept US demands such as halting its nuclear program or fully reopening the Strait of Hormuz.

Instead of being pushed back into a passive position, Iran gained leverage under a new framework of limited passage, selective clearance and sovereign tolling. On the first day of the ceasefire, more than 200 oil tankers were still waiting for approval to transit.

NATOs Internal Fractures Have Become More Visible

Unlike past crises, the war did not produce a unified NATO response aligned behind Washington. European allies underperformed US expectations on base access, maritime escort missions and operational coordination. This quickly turned US pressure on Iran into open pressure on NATOs cohesion and reliability.

US media reported that President Trump was deeply dissatisfied with Europe‘s reluctance and repeatedly hinted at reassessing America’s role in NATO, including the possibility of troop reductions or reconsidering membership commitments. German Chancellor Friedrich Merz expressed concern about potential alliance divisions, and NATO Secretary General Mark Rutte traveled to Washington to stabilize expectations, though underlying mistrust remained unresolved.

The Energy Crisis Is Accelerating the Shift Toward Renewables

In Europe, nine countries have pledged up to 300 GW of offshore wind capacity by 2050. France has launched tenders for 12 GW of new renewable projects, including 10 GW of offshore wind. The United Kingdom removed import tariffs on 33 categories of offshore wind components starting April 1 to reduce supply chain costs.

Japan‘s Renewable Energy Institute has warned that the Hormuz crisis exposed Japan’s extreme dependence on imported fossil fuels, urging faster development of domestic renewables to reduce reliance on Middle Eastern shipping routes.

In short, energy security is no longer about buying more oil. Major economies are reassessing the strategic value of wind power, storage, grid upgrades and domestic alternatives.

China is likely to be a key beneficiary. In the first two months of 2026, Chinas exports grew 21.8 percent year on year, with new energy products such as EVs, lithium batteries and solar equipment leading the gains.

The Dollar System Faces Growing Marginal Strain

While the stated US objective was to curb Irans nuclear capabilities, the deeper logic centered on regaining control over Middle Eastern energy routes and pricing power, which underpin the petrodollar system.

Yet the United States did not reestablish dominance over the Strait of Hormuz. Iran is exploring quasi-institutionalized arrangements, including charging transit fees and accepting cryptocurrency or renminbi for certain passages.

This does not imply an imminent collapse of dollar dominance. The dollar still holds overwhelming weight in global trade, reserves and energy finance. But once the worlds most critical energy chokepoint begins to see real non-dollar settlement, even on a limited scale, the exclusivity of the petrodollar weakens.

Gold and Oil Are Being Repriced

In past geopolitical crises, gold typically rallied as the primary safe haven. This conflict is different because the target region is the worlds most critical oil producing and shipping hub. Oil surged first, while gold experienced heightened volatility as ceasefire headlines and shifting rate expectations pulled markets in opposite directions.

In the early phase, markets traded the inflationary impulse of higher oil prices and the prospect of prolonged restrictive monetary policy, which temporarily capped golds upside.

Over the longer term, however, oil and gold are unlikely to diverge permanently. Oil prices may retreat from extreme highs as war premiums fade, but structural factors such as altered Hormuz transit rules, elevated Gulf risk premiums and reassessed strategic inventories suggest prices may not return to pre conflict lows.

Gold, meanwhile, may strengthen over time. Despite short term pressure from higher rate expectations and dollar resilience, rising de dollarization discussions, slowing global growth and mounting fiscal constraints reinforce golds long term allocation logic.

ETO Markets will continue to monitor cross asset transmission channels across energy, currencies and risk assets, providing investors with forward looking frameworks and risk identification tools in an era of rising uncertainty.