Skip to main content
PGIM LogoPGIM Logo
    • Megatrends
    • Annual Best Ideas
    • OutFront Series
    • Quarterly Market Outlooks
    • Vantage Point Series
    • Market Events
    • Thought Leadership
    • Events & Webinars
    • Video Library
    • Podcasts
    • Investing in Alternatives
    • Risk Management
    • ESG Investing
    • Opportunities in EM
  • Alternatives

    • PGIM Private Alternatives
    • PGIM Private Capital
    • PGIM Real Estate
    • Montana Capital Partners (PE)

    Equity & Fixed Income

    • PGIM Fixed Income
    • Jennison Associates

    Solutions

    • PGIM DC Solutions
    • PGIM Multi-Asset Solutions
    • PGIM Quantitative Solutions

    Intermediary Distribution

    • PGIM Investments
    • Clients We Serve
    • Defined Contribution
    • Financial Advisors
    • Institutional Relationships
    • Global Locations
    • Contact Us
    • Overview
    • Leadership
    • History
    • Our Businesses
    • Diversity, Equity & Inclusion
    • Global Locations
    • Contact Us
    • Subscribe
    • Request for Information
    • Careers at PGIM
    • Job Opportunities
    • All News
    • Press Releases
    • In the News
    • Facts & Figures
    • Media Contacts
stock market
Commentary

Geopolitical Tensions Rise in the Middle East: PerspectivesGeopoliticalTensionsRiseintheMiddleEast:Perspectives

With Magdalena Polan & Mehill Marku — Apr 17, 2024

Share
  • Mail
  • LinkedIn
  • Twitter
  • Copy URL
  • Print

Share

An escalation of hostility in the Middle East has led to increased geopolitical nervousness and heightened risk of further economic volatility. As we watch developments closely following Iran’s strikes in Israel, our experts give a short perspective on the outlook for oil, commodities and inflation risk, as well as a geopolitical temperature check.

 

Read the Transcript

Magdalena Polan, Head of Emerging Market Macroeconomic Research, PGIM Fixed Income:

It of course matters from a geopolitical perspective, adding to concerns about stability, peace and conflict. But it also matters for markets for more practical reasons. Oil being produced in the region is still a very important commodity, and any disruption to either production or the shipping routes would put upward pressure on inflation, which was just reduced closer to targets after the Covid shock, and would also then potentially restrict supplies, especially to countries in Europe and Asia, which still very much rely on imported energy. It also adds to uncertainty over the support of Western countries for Ukraine as their attention shifts somewhere else. And that, of course, matters a lot for countries in Europe, especially in the region, but for the whole of Europe overall.

For emerging markets especially, events like this add to risk perception and EM assets tend not to fare as well in the events of geopolitical risk. Oil prices, of course, go up. We also have seen gold prices going up, but also volatility in the major markets measured by various indices can go up and with that also the so called flight to safety, which tends to benefit US Dollar, US Treasuries and developed market assets in general at the expense of emerging market assets. These sell offs can be short lasting, of course. But yet another item in our geopolitical risk agenda definitely adds to these concerns, adding to a potentially more disruptive and negative, or at least worrying, scenario for emerging markets and global markets in general. 

 

Mehill Marku, Lead Geopolitical Analyst, PGIM Fixed Income:

Should this conflict expand to include other countries or include the Middle East, then this will be an important development, a development that most likely will lead to disruptions in the flow of oil to global markets, something that no major player in the Middle East wants to happen. United States and China do not want to see higher prices of oil. Russia and Saudi Arabia want to see the flow of oil continue to Asian markets, and Iran obviously would not like to see re-enforcement of the sanctions against its oil. They are very interested in continuing to send roughly 1.5 million of oil to China. Such disruptions would also affect the expectation of inflation in terms of impacting central bank action. Most likely I can see central banks waiting to see how developments play out on the ground before taking any further action. And finally, I would say that gold most likely will continue to climb as the best hedge, both against inflation expectations as well as a hedge against further deterioration of the situation in the Middle East.

  • By Magdalena PolanHead of Emerging Market Macroeconomic Research, PGIM Fixed Income
  • By Mehill MarkuLead Geopolitical Analyst, PGIM Fixed Income

you may also like

Is globalization truly coming to an end?
Market Events

Is globalization truly coming to an end?

Apr 10, 2025

Discover how shifting trade dynamics are reshaping the global economy.

PGIM CEO David Hunt on Constructing Resilient Portfolios in 2025
Outlook

PGIM CEO David Hunt on Constructing Resilient Portfolios in 2025

By David Hunt — Dec 12, 2024

David Hunt, PGIM President and CEO, discusses major investment themes for 2025.

How Has AI Impacted Data Center Rental Rates?
Outfront

How Has AI Impacted Data Center Rental Rates?

Dec 5, 2024

Data center rental rates continue to climb, a combination of the intense demand for AI and limited supply of data centers due their enormous energy needs.

  • Insights

    • Megatrends
    • Annual Best Ideas
    • OutFront Series
    • Quarterly Market Outlooks
    • Market Events
    • Thought Leadership
    • Events & Webinars
    • Video Library
    • Podcasts
  • Investment Themes

    • ESG Investing
    • Investing in Alternatives
    • Investing in Emerging Markets
    • Risk Management
  • Our Businesses

    • PGIM DC Solutions
    • PGIM Fixed Income
    • PGIM Investments
    • PGIM Multi-Asset Solutions
    • PGIM Private Alternatives
    • PGIM Private Capital
    • PGIM Real Estate
    • Montana Capital Partners (PE)
    • PGIM Quantitative Solutions
    • Jennison Associates
  • Clients

    • Clients We Serve
    • Defined Contribution
    • Financial Advisors
    • Institutional Relationships
  • About

    • Overview
    • Leadership
    • History
    • Diversity, Equity & Inclusion
    • Global Locations
    • Contact Us
    • Subscribe
    • Request for Information
  • Careers

    • Careers at PGIM
    • Job Opportunities
  • Newsroom

    • All News
    • Press Releases
    • In The News
    • Facts & Figures
    • Media Contacts
PGIM Logo
  • Terms & Conditions
  • Privacy Center
  • Accessibility Help
  • UK Regulatory Disclosures
  • Netherlands Regulatory Disclosures
  • Canadian Regulatory Disclosures
  • Ireland Gender Pay Gap Report
  • Cookie Preference Center

For Professional Investors only.* All investments involve risk, including the possible loss of capital.

This material is for informational and educational purposes only and should not be construed as investment advice or an offer or solicitation in respect of any products or services to any persons who are prohibited from receiving such information under the laws applicable to their place of citizenship, domicile or residence. PGIM is the principal asset management business of Prudential Financial, Inc. and a trading name of PGIM, Inc. and its global subsidiaries. PGIM, Inc. is a registered investment adviser with the U.S. Securities and Exchange Commission (“SEC”). Registration with the SEC does not imply a certain level of skill or training.

The information on this website is not intended as investment advice and is not a recommendation about managing or investing your retirement savings. In making the information available on this website, PGIM, Inc. and its affiliates are not acting as your fiduciary.    

In the United Kingdom, this website may be issued by PGIM Private Alternatives (UK) Limited or PGIM Private Capital Limited.  In the European Economic Area (“EEA”), this website may be issued by PGIM Private Capital (Ireland) Limited or PGIM Luxembourg S.A. or PGIM Real Estate Germany AG.

PGIM, Inc. has its headquarters at 655 Broad Street, Newark, NJ 07102. PGIM Private Capital (Ireland) Limited has its registered office at IDA Business Park, Letterkenny, Co. Donegal, F92 FP83, Ireland. PGIM Private Capital (Ireland) Limited is authorised and regulated by the Central Bank of Ireland and registered in Ireland under company number 635793 operating on the basis of a European passport. PGIM Limited and PGIM Private Alternatives (UK) Limited have their registered offices at Grand Buildings, 1-3 Strand, Trafalgar Square, London WC2N 5HR. PGIM Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) of the United Kingdom (Firm Reference Number: 193418). PGIM Private Alternatives (UK) Limited is authorised and regulated by the FCA of the United Kingdom (Firm Reference Number: 181389). PGIM Private Capital Limited has its registered address at 1 London Bridge, London SE1 9BG and is authorised and regulated by the FCA of the United Kingdom (Firm Reference Number: 172071). PGIM Luxembourg S.A., Netherlands Branch is registered with the Netherlands Chamber of Commerce under number 85998877 and has its local offices at Gustav Mahlerlaan 1212, 1088LA Amsterdam, The Netherlands. PGIM Luxembourg S.A. has its registered address at 2 Boulevard de la Foire, L-1528 Luxembourg and is authorised and regulated by the Commission de Surveillance du Secteur Financier (“CSSF”) in Luxembourg (registration number A00001218). PGIM Real Estate Germany AG has its registered address at Wittelsbacher Platz 1, 80333 Munchen, Germany and is authorised and regulated by Bundesanstalt für Finanzdienstleistungsaufsicht (“BaFin”) in Germany (registration number 10138142).

In Japan, information is provided by PGIM Japan Co., Ltd. (“PGIM Japan”) and/or PGIM Real Estate (Japan) Ltd. (“PGIMREJ”).  PGIM Japan, a registered Financial Instruments Business Operator with the Financial Services Agency of Japan offers various investment management services in Japan.  PGIMREJ is a Japanese real estate asset manager that is registered with the Kanto Local Finance Bureau of Japan.

In Hong Kong, information is provided by PGIM (Hong Kong) Limited, a regulated entity with the Securities & Futures Commission in Hong Kong to professional investors as defined in Section 1 of Part 1 of Schedule 1 of the Securities and Futures Ordinance (Cap. 571). In Singapore, information is issued by PGIM (Singapore) Pte. Ltd. (“PGIM Singapore”), a regulated entity with the Monetary Authority of Singapore under a Capital Markets Services License to conduct fund management and an exempt financial adviser. This material is issued by PGIM Singapore for the general information of “institutional investors” pursuant to Section 304 of the Securities and Futures Act 2001 of Singapore (the “SFA”) and “accredited investors” and other relevant persons in accordance with the conditions specified in Section 305 of the SFA. In South Korea, information is issued by PGIM, Inc., which is licensed to provide discretionary investment management services directly to South Korean qualified institutional investors on a cross-border basis.   

Prudential Financial, Inc. (“PFI”) of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. 

*PGIM.com/Podcasts and its content is intended for informational or educational purposes only and is not directed exclusively to Professional Investors. 

PGIM Logo
PGIM Logo

You are viewing this page in preview mode.

Edit Page