Dr Sailesh Kumar Jha
As disruption in the Strait of Hormuz rattles energy markets, former Credit Suisse Chief Asia Economist Dr Sailesh Kumar Jha delivers a measured verdict: global markets are absorbing the shock — for now. But he identifies three thresholds that, if breached, could trigger rapid capital flight from Asian markets.
By TENGKU NOOR SHAMSIAH TENGKU ABDULLAH
SINGAPORE — In the space of five days, one of the world’s most critical energy corridors has come under severe disruption. The Strait of Hormuz — through which roughly one-fifth of globally traded oil and significant volumes of liquefied natural gas pass each day — has seen commercial shipping activity slow dramatically since joint US-Israeli strikes on Iran began on February 28 under Operation Epic Fury.
An IRGC commander declared the strait “closed” and warned any vessel attempting passage would be set ablaze. At least five tankers have reportedly been struck while more than 150 ships remain stranded in surrounding waters. Major shipping companies Maersk and Hapag-Lloyd have suspended transits through the corridor.
Meanwhile, QatarEnergy — one of the world’s largest LNG exporters — has suspended operations at key facilities following Iranian drone strikes on its Ras Laffan and Mesaieed sites, sending European gas prices surging nearly 50 per cent and Asian LNG prices rising close to 39 per cent.
Brent crude has climbed above US$82 a barrel. Oil supertanker freight rates from the Middle East to China have hit record levels, jumping 94 per cent in a single trading session. Goldman Sachs has warned prices could reach US$100 a barrel if the disruption to Hormuz persists for five weeks — a timeline that closely mirrors US President Donald Trump’s own projection of a four-to-five-week military campaign.
Against that backdrop, TNS News spoke exclusively with Dr Sailesh Kumar Jha, former Chief Asia Economist at Credit Suisse AG in Singapore, for his assessment of what the conflict means for global financial markets, monetary policy and Asian capital flows.
Dr Sailesh Kumar Jha’s assessment of the US–Iran conflict’s impact on global energy markets, Asian currencies and financial flows.
Graphic: AI-assisted illustration
Geopolitical Shock, Not a Structural Break
Dr Sailesh’s opening answer ran counter to some of the heightened anxiety now visible in markets.
Asked whether investors are witnessing a short-lived geopolitical flare-up or the beginning of a structural repricing of risk across oil, equities, bonds and currencies, he offered a carefully differentiated response.
His first point centred on asset allocation.
“From an asset allocation perspective, for the first half of 2026, I am overweight equities, gold, silver, and USD. I am market weight cash — which can be expressed via investing in US money market funds — and underweight fixed income, BTC and ETH,” he said.
He added a tactical call for technology stocks.
“Buy on dips the US and North Asia big tech/Magnificent 7 around June, with more market turbulence likely till around May beyond the current events transpiring in the Middle East.”
His broader judgement, however, was clear: the conflict does not yet represent a structural turning point for the global financial system.
“My sense is that the current volatile events in the Middle East will not be a long drawn-out affair, with some sort of stability emerging in the next few weeks. These geopolitical risks are unlikely to lead to structural changes in the global financial markets and economy.”
He acknowledged the visible movements in markets — equities declining while oil, gold and silver rally sharply — but urged investors to interpret them carefully.
“Global equities declines and oil price increases along with significant rises in gold and silver prices are suggesting that the geopolitical risks in the Middle East are large and could potentially drag on for some time. However, market pricing in these asset classes doesn’t suggest a structural break in global financial markets and the economy.”
More reliable signals, he argued, are emerging from currencies and sovereign debt markets.
“Global currency and government bond markets are more closely aligned with my aforementioned assessment of the geopolitical outlook for the Middle East — relatively more sanguine,” he said.
Oil at US$77–$87, and a Fed That Will Not Blink
On energy markets, Dr Sailesh offered a range that tempers some of the more dramatic forecasts circulating on Wall Street.
“Brent oil prices are unlikely to trade above the USD 77–87 per barrel range for a sustained period of time, since my sense is that the current volatile events in the Middle East will not be a long drawn-out affair, with some sort of stability emerging in the next few weeks.”
Even within that relatively contained scenario, he said the implications for monetary policy are significant.
The US Federal Reserve — already navigating elevated inflation and strong economic growth — now has little room to ease policy.
“Even if I’m correct on my Brent oil price assessment and a short-lived period ensues for the geopolitical risks unfolding in the Middle East, the US Federal Reserve is unlikely to cut policy rates further in the first half of 2026, and the scope for any cuts is quite limited in the second half of 2026, as the growth outlook for the US is strong for the better part of 2026 and inflation risks will remain high for much of 2026. I’m not worried about the labor market in the US.”
Across Asia, the monetary policy outlook is more mixed.
“In Asia, the possibility for policy rate cuts in China, Indonesia, and Thailand remains in the second half of 2026. The possibility for policy rate hikes remains in Japan. Malaysia and Korea will be on hold for much of 2026, while the balance of risks is skewed for Singapore to tighten monetary policy in the second half of 2026.”
The result, he suggested, could be a more divergent policy landscape across the region even as energy-driven inflation risks persist.
Asia Will Hold — But Watch Three Numbers
On Asian capital markets, Dr Sailesh struck a broadly constructive tone that contrasts with some investor fears of an emerging-market selloff.
“Asia is likely to show resiliency, broadly speaking, as it relates to portfolio flows to its capital markets. The region’s financial markets, economy, and dynamics of core CPI inflation are likely to remain well insulated from the events transpiring in the Middle East.”
He also offered a specific outlook for currencies.
The US dollar, measured by the DXY index, appears to have bottomed out.
He expects the DXY to trade “in the 97–101 range in the first half of 2026, followed by potentially higher levels in the second half.”
Within that stronger-dollar environment, some Asian currencies face greater vulnerability than others.
“The pressure on some Asian currencies to depreciate against the USD remains for IDR, INR, and KRW,” he said.
On the other side of the ledger, he expects several regional currencies to outperform.
“CNH, MYR, and SGD are likely to outperform in Asia.”
The Malaysian ringgit, in other words, is among the currencies he believes could show relative resilience through the current turbulence — a notable assessment for Malaysian investors and businesses navigating the uncertainty.
Yet his constructive outlook comes with clear conditions.
“These baseline views can get challenged in the event that the following three significant downside risks arise: one, Brent oil prices trade well over the USD 100–120 per barrel range for a sustained period of time; two, US equity markets enter a sustained bear market; three, the USD trades well over the 107 level for a sustained period of time and US Treasury 10-year bond yields trade around the 5.0 per cent range for a sustained period of time.”
Under those circumstances, the capital flow picture could change rapidly.
“Under these extreme conditions, I expect significant net portfolio outflows from Asian capital markets and significant currency depreciation pressure across most Asian currencies.”
As of the time of the interview, none of those thresholds had been breached.
Goldman Sachs has warned that oil could reach US$100 under a prolonged Hormuz disruption scenario — a trajectory that aligns with current military timelines. The distance between Dr Sailesh’s constructive baseline and those red lines remains visible, but not wide.
The conflict that escalated following reports of the killing of Iran’s Supreme Leader Ayatollah Ali Khamenei on February 28 has already drawn in Hezbollah, triggered retaliatory Iranian strikes from Lebanon to the UAE and Qatar, and forced the US State Department to evacuate more than 9,000 American citizens from the region.
Iranian officials have also reportedly made preliminary contact with the United States regarding possible pathways toward de-escalation.
Whether the coming weeks bring stabilisation or further escalation will determine whether Dr Sailesh’s three red lines remain intact — and whether his cautiously constructive outlook for Asian markets proves correct. – TNS NEWS
Dr Sailesh Kumar Jha is the former Chief Asia Economist at Credit Suisse AG, Singapore. He was interviewed by TNS News as part of ongoing coverage of the US-Iran conflict and its global financial market implications.
Market data sources: CNBC, Al Jazeera, Euronews, Reuters, Goldman Sachs, Kpler, Vortexa, Argus Media, LSEG. Pricing as of March 4–5, 2026.