Financial adviser deVere Group says markets are mispricing the risk from Washington’s escalating campaign against Iran, after Treasury Secretary Scott Bessent vowed economic measures “that have never been seen.”
Bessent told Newsmax on Thursday the US would combine sweeping economic isolation with an indefinite naval blockade of the Strait of Hormuz, “that will keep anything from going in or out of the Iranian ports.” Defense Secretary Pete Hegseth echoed the stance, telling reporters the Navy can sustain the blockade “indefinitely” by rotating ships in and out. The USS George Washington strike group left Vietnam on August 12 to relieve the USS Abraham Lincoln, which has spent more than 250 days deployed in the region, well past its original schedule. Brent crude has traded in the high $80s a barrel this week after spiking toward $90 earlier in August, while shipping industry reports show war-risk insurance premiums on vessels transiting Hormuz climbing sharply from pre-war levels as daily transits through the strait have fallen well below their historical average.
Nigel Green, chief executive of deVere Group, said the market has treated Bessent’s language as rhetoric rather than a genuine shift in strategy. “Bessent didn’t use the phrase never seen before by accident. I believe this is a signal, not a soundbite,” he said, arguing that four parts of the market have not adjusted. He pointed first to interest rates, arguing that renewed energy-driven inflation pressure could push the Federal Reserve toward a rate hike rather than the cuts traders had expected. He also flagged an unusual pattern in currency markets, where sanctions enforcement is strengthening the dollar even as gold rallies as a hedge against both inflation and escalation, a combination he said leaves many portfolios positioned for only one outcome. Green said Asian refiners buying discounted Iranian crude through ship-to-ship transfers and sanctions-evading tankers face direct exposure to margin pressure if enforcement tightens further, and urged investors to watch shipping insurance and freight costs, which he said tend to move before oil prices do.
Green said he has watched three previous escalations up close, in 2012, 2019 and the 2022 sanctions campaign against Russia, and that each proved larger and longer-lasting than markets initially expected. “The four blind spots — rates, currencies, refiners, and freight — will likely not stay blind spots much longer,” he said.
