Global Market | Oil Shock 2.0? Markets recall 2022 turmoil as war escalates

Global financial markets are increasingly drawing comparisons with the turmoil that followed Russia’s invasion of Ukraine in 2022, as the ongoing war in the Middle East threatens to trigger another wave of energy-driven inflation. Investors are revisiting the market playbook from four years ago to gauge how the latest geopolitical shock could ripple through global assets, from equities and bonds to currencies and commodities.

According to a Reuters report, the earlier crisis unfolded when the world economy was emerging from the COVID-19 pandemic and was already grappling with rising inflation. The surge in energy prices at that time amplified inflationary pressures, pushing global equities lower and sending investors towards traditional safe-haven assets such as the U.S. dollar. Economists note that some of the same underlying vulnerabilities exist today, including a fragile global growth outlook and trade tensions that have already placed upward pressure on prices.

Oil Shock Echoes 2022 Turbulence

The most striking similarity between the two crises has been the dramatic movement in energy markets. Brent crude prices have surged roughly 40% since the United States and Israel launched strikes in the region two weeks ago, bringing prices close to the $120-per-barrel mark.By comparison, during the early phase of the Russia-Ukraine war in 2022, Brent had risen around 15% over the same two-week period, although it briefly climbed to levels not seen since 2008.

Analysts say the global energy market has shifted dramatically since the pandemic. Supply chains that once operated with relative stability are now repeatedly disrupted by geopolitical events, creating a pattern of sudden supply shocks. The current spike in oil prices is the latest example of this new volatility.Currency markets have also shown a familiar pattern. Reuters data indicates that the U.S. dollar has appreciated about 2.6% since the Middle East conflict escalated, mirroring the strengthening of the greenback in the early days of the Ukraine war.

Safe Havens Behaving Differently

Despite the similarities in oil and currency markets, several other assets have reacted very differently this time.

European wholesale gas prices have risen about 58% since the conflict intensified. While significant, that increase is far smaller than the nearly four-fold surge seen in 2022, when Europe faced a direct energy shock because of its heavy reliance on Russian gas supplies, Reuters noted.

Bond markets are also showing a contrasting response. Germany’s benchmark 10-year Bund yield has climbed roughly 30 basis points since the conflict began, whereas yields initially fell in 2022 as investors rushed into government debt. The difference suggests that markets are more quickly pricing in the risk of renewed inflation this time around.

However, longer-term inflation expectations remain relatively stable. The euro zone’s five-year forward inflation swap is still hovering around 2.18%, close to the European Central Bank’s 2% target, indicating that markets are not yet anticipating a sustained inflation surge.

Central Banks Watching, Not Reacting

While the energy shock raises concerns about inflation, analysts say central banks are unlikely to respond immediately with aggressive policy tightening.

Policymakers are expected to wait for sustained increases in core inflation before altering their policy stance. Unlike in 2022, when post-pandemic price pressures forced central banks worldwide to rapidly raise interest rates, inflation expectations today remain more contained.

Gold and Bonds Lose Some Safe-Haven Appeal

Another notable divergence from the 2022 playbook is the performance of traditional safe-haven assets.

Gold, which rallied sharply during the early days of the Ukraine war, has fallen about 3% since the Middle East conflict escalated. Analysts attribute the decline partly to rising bond yields and a stronger dollar, which tend to reduce the appeal of non-yielding assets such as gold.

Strategists say the crisis currently appears more directly tied to energy markets rather than posing a broader systemic risk, which may be limiting the demand for general-purpose hedges.

European Equities Under Pressure

Equity markets have also been affected, though not as dramatically as in 2022.

European stocks have fallen roughly 5% since the conflict began, compared with about a 10% drop in the first two weeks after Russia invaded Ukraine, Reuters data shows. Europe remains particularly vulnerable because of its reliance on imported energy, even though the Middle East conflict is geographically more distant than the Ukraine war.

Strategists at Barclays estimate that if oil prices remain around $100 per barrel, the pan-European STOXX 600 index could fall toward 550 points, representing a decline of roughly 13% from late-February levels.

However, market positioning ahead of the crises differs significantly. European stocks were already under pressure before Russia’s invasion in 2022, while the current downturn follows a period in which European equities had rallied strongly amid investor diversification away from U.S. markets and expectations of fiscal stimulus.

Volatility Concentrated in Energy

Market volatility indicators also reveal that the current shock is largely concentrated in energy markets.

The CBOE oil volatility index has surged to a five-year high of about 120%, surpassing the peak reached after Russia’s invasion of Ukraine in 2022, as per a report by Reueters. Outside the energy sector, however, volatility remains relatively contained.

The VIX index, which tracks expected volatility in U.S. equities, is hovering near 25, elevated but still well below the extreme levels seen during the COVID-19 crisis or the spike above 60 recorded in April 2025.

Similarly, the ICE BofA MOVE index, a key measure of bond market volatility, has risen to around 95, according to Reuters. Although that marks its highest level since mid-2025, it remains significantly below the 140 peak recorded during the early weeks of the Ukraine conflict.

A Different Crisis, For Now

For now, markets appear to be treating the Middle East conflict as a serious but contained shock, rather than the beginning of a broader financial crisis. Energy markets remain the epicenter of the turmoil, while equities, bonds, and currencies have shown more measured reactions.

Investors are nevertheless watching closely for signs that the energy spike could feed into broader inflation pressures or disrupt global supply chains. If that happens, the parallels with the market turmoil of 2022 could become much stronger.