The Threshold For An Oil-Driven Risk-Off Move

Geopolitical events don’t usually cause a sustained market reaction (indeed, we’ve already seen that in 2026 with Venezuela and Greenland), but, as Deutsche Bank notes this morning, the exception is when the geopolitical event has a macro channel to affect markets, and events in Iran are a prime example of that.

With equities tumbling this morning - after yesterday's put-selling driven dip-buying -  Deutsche points out that sustained S&P 500 drawdowns in recent decades (above 15%) driven by oil shocks have historically required at least one of the following, and none of these historical conditions has yet been met: