Bloomberg Surveillance: Iran Shock, Energy Crisis and the Fed — BlackRock & Eurasia Group Analysis

This content is compiled from Bloomberg Surveillance's March 26, 2026 broadcast, from analyses by BlackRock and Eurasia Group experts.

Eurasia Group: Geopolitical Risk Not Priced In Eurasia Group analysts argue that markets still haven't sufficiently priced in the probability of the Iran-US tension escalating. The conflict scenario probability matrix was revised: mid-scale conflict probability rose to 35%.

BlackRock: Energy Sector Rerating BlackRock strategists say conditions are maturing for a structural revaluation of the energy sector in the Gulf tension environment. Increasing positions discussed for XOM, CVX, and European energy giant Shell.

Inflation and Second Wave of Supply Chain Disruptions In the worst Middle East scenario, global supply chain shocks could trigger a second wave of inflation. Shipping costs, electronics, and automotive parts supply are front and center.

The Fed's Impossible Triangle Bloomberg analysts summarize that the Fed faces a triple squeeze: it can't raise rates against geopolitically-sourced inflation because the economy is slowing. It can't cut rates because inflation is stubborn. It can wait and watch, but this increases uncertainty.

Global Portfolio Recommendation Both BlackRock and Eurasia analysts reach similar conclusions: increase energy weighting, reduce long-term US bonds, consider European defense stocks within developed markets.