Ceasefire pulls markets from 'peak war' pricing; Oil retreats, but still 40% higher

The Iranian conflict of 2026, which began on February 28, 2026 and escalated sharply, with operation epic fury, has caused dramatic volatility across global markets. As of late April 2026, many assets have experienced peak war pricing, though a recent fragile ceasefire has begun to pull some prices back from their extremes.

• Oil
  Brent crude oil surged nearly 64% from its close price of approx. $73.50 on Friday, February 27th before the war started, to a peak of $120 in early March as the closure of the strait of Hormuz strangled global supply. Following the mid-April ceasefire, the daily close prices have retraced to below $100 per barrel but remain roughly 35% higher than pre-conflict levels. Despite the ceasefire, the persistent geopolitical risks remain, Iran's disruption of shipping in the strait of Hormuz, fears of an extended conflict and a US naval blockade led traders to price in supply tightening, driving prices back up toward its 52-week highs near $120 by the end of April 2026.
  
• Gold
  Contrary to its traditional safe-haven role, gold saw extreme volatility. It initially dropped from a high near of $5400 on March 2nd down to the $4000 level, a drop of approximately 25% as investors favoured the liquidity of the US Dollar, but it experienced a sharp flight to safety spike to over $4,800 in early April during the most intense strikes before settling back towards $4,700.
  
• Bitcoin
  Bitcoin proved resilient after an initial dip, eventually rallying nearly 18% by late April. While it didn't track oil's explosive growth, it outperformed the traditional currency market as a decentralised alternative.
  
• The US dollar
  The dollar index (DXY) remained strong through the height of the conflict, acting as the primary global reserve. However, it saw a sharp correction in late April (dropping back to near 97.70, its conflict-start level) as the extension of the ceasefire, along with expectations for higher interest rates globally, shifted investor sentiment back toward risk-on assets and other currencies.
  
• Major currencies
  These stayed relatively stable compared to commodities. The Canadian dollar (CAD) saw a slight boost from rising oil prices, while the euro (EUR) and Australian dollar (AUD) were pressured during the peak of the conflict. However, as the geopolitical situation stabilises, the euro (EUR/USD) has returned to its pre-war price level, while the Australian dollar (AUD) and the Canadian dollar (CAD) have surpassed theirs.

What's next remains unknown; however, given supply chain disruptions, it will take time for the impact of the spike in energy and commodity prices to conclude. If the ceasefire holds through May 2026, the market may shift from crisis to recovery mode, though it should be difficult to expect that we see an immediate return to pre-war prices, especially for energy.

According to the US Energy Administration Information (EIA), brent crude oil is projected to appreciate to $115 per barrel in Q2 2026, and to ease back to $90 by Q4 of 2026¹. The strait of Hormuz remains a critical bottleneck, and if naval blockades persist, oil's new normal floor may settle at price levels, different and potentially higher from their pre war ones.

Gold prices expectations remain a challenge, the precious metal price reaction to the Middle East war seemed to show that it may have lost some of its immediate panic premium, or was possibly priced in. Looking ahead, gold remains supported by persistent global inflation and any upside move may hinge on how the current global conflicts ends, and the US dollar status.

When it comes to risk assets, the recovery seen following the initial dip at the start of the war was remarkable. Bitcoin prices moved up as peace talks progressed, reaching near $80,000 as geopolitical tension eased and investors rotated back into growth assets². Similarly, the EUR and AUD exchange rates dropped against the US Dollar as the war started, then saw a bullish recovery from around mid-March 2026, roughly two weeks into the conflict. This recovery gained momentum as the threat of a European recession, fueled by high energy costs, began to diminish. The EUR/USD may remain supported, as traders reconsider removing the energy-risk discount, potentially leading to a repeat of past price movements.

Conversely, if past performance repeats, safe-haven assets could retrace. The US Dollar Index (DXY) is likely to weaken if the safe-haven bid evaporates. Furthermore, if the Fed signals potential rate cuts to stimulate the economy, which it has yet to do at the time of writing—the Greenback may face additional headwinds. The Swiss Franc situation remains unique. The CHF correlation to the Euro may impact its appeal as a carry trade funding currency, particularly if investors continue to leverage the CHF to seek higher-yielding opportunities in currencies such as the AUD or CAD.

It goes without saying that there are many factors that may influence the energy markets and currency exchange rates, however, the future of global markets currently hinges significantly on the stability of the ceasefire and the accessibility of the Strait of Hormuz. There are two primary scenarios for how this could unfold:

If the ceasefire remains intact, markets may continue their fragile recovery. However, if the Strait of Hormuz remains partially restricted or if maritime insurance premiums stay elevated, a major bearish correction in oil prices can be limited and shallow.

The US Dollar Index (DXY) is likely to weaken against its major peers as the safe-haven bid evaporates, and it may face additional headwinds if the Fed signals potential rate cuts to stimulate the economy.

A breakdown of the peace talks would likely trigger a return to extreme volatility and renewed energy shocks. Under this scenario, Brent Crude could surge as supply disruptions intensify, particularly if the Strait remains a military target or insurance becomes unobtainable.

In the event of a collapse, the US Dollar would likely see a powerful resurgence as a liquid refuge, potentially surpassing its recent peaks on the DXY. Conversely, the Euro and Australian Dollar would face significant downward pressure due to their high sensitivity to energy costs and global growth prospects.

Footnotes

¹ https://www.eia.gov/outlooks/steo/

² https://finance.yahoo.com/markets/crypto/articles/bitcoin-price-surges-77-500-083949012.html