GF Securities released a research report maintaining its core conclusions. First, stock indices will require a period of bottom consolidation. Second, during the "April decision-making" period, the focus should be on independent high-growth sectors with little correlation to high overseas oil prices, high inflation, and high interest rates. These sectors include new energy, domestic AIDC, and overseas computing power.
The economic impact of a closure of the Strait of Hormuz includes the following projections. A model from the Dallas Fed indicates a 58% probability that the Strait remains closed through the end of the second quarter of 2026. Trading results from the prediction market Kalshi show a 63% probability of the Strait reopening before July 2026. A closure would directly reduce global oil supply by nearly 20%. It would also cut LNG supply by approximately 20%, urea by about 30%, ammonia and phosphates by roughly 20%, and sulfur supplies by around 50%. The Dallas Fed model suggests that a one-quarter closure, without other mitigating measures, could push the average WTI crude price to $98 per barrel in Q2 2026. This scenario could reduce global GDP growth by 2.9 percentage points in that quarter. The most likely current market expectation is a Q2 shock followed by a Q3 recovery, without a substantial recession.
Comparing the current oil crisis to historical episodes reveals potential price paths. After spiking during conflict, oil prices typically follow one of two patterns: a sharp spike followed by a rapid decline, or a spike followed by a sustained period of high prices. Historical comparisons show that prior to the current conflict, the economic cycle was in a phase of fiscal easing and demand recovery, similar to the period around the Kosovo War. The monetary cycle was in a rate-cutting phase before the conflict, analogous to the Gulf War era, though the current cuts represent monetary normalization whereas previous cuts occurred during recessions. Regarding oil price trends, the first and second oil crises saw prices remain high due to persistent supply constraints. During the Kosovo War, OPEC production cuts and rising demand also supported high prices. In contrast, prices spiked and then quickly retreated after the Gulf War, returning to pre-war levels within six months, and after the Russia-Ukraine conflict, returning to pre-war levels within three months.
A review of market and sector performance following past war crises shows several patterns. Sectors that typically outperform during crises include war-related beneficiaries like oil, precious metals, and defense, as well as defensive sectors like telecommunications and tobacco. However, defensive stocks can also decline late in a bear market, as seen in August-September 1974. Strong secular growth trends also outperform, such as consumer sectors in the 1980s and technology in the 1990s. Outperformance in oil and gas stocks generally peaks along with the oil price. Sectors most negatively impacted by high oil prices are typically travel and leisure. If high oil prices persist after an initial spike, the impact on inflation and demand varies. The first oil crisis was a negative case, leading to stagflation. The second oil crisis was positive, as the war's impact lasted only one month. The Kosovo War was also a positive case, with a gradual oil price impact. If oil prices spike and then retreat quickly, markets typically absorb the war shock briefly and then revert to their prior trends, which are defined by the dominant sector themes of the era. Capital may even concentrate further into sectors with the most certain growth prospects, such as defense around 1980, consumer sectors around 1990, and technology in the late 1990s.
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