CITIC reviewed eight Middle East conflicts since 1970 and discovered four important patterns

# CITIC Securities Research

CITIC Securities reviewed eight major Middle East conflicts since 1970 and summarized four key asset market patterns:

1. **Safe-haven assets**: Gold’s safe-haven properties and performance are generally stronger than the U.S. dollar.

2. **Crude oil prices**: While subject to short-term shocks from sudden events, long-term trends remain determined by supply and demand fundamentals.

3. **U.S. stock market performance**: Directly correlated with the degree of U.S. military involvement and the clarity of the war situation.

4. **Chinese assets**: No significant direct impact from past conflicts.

## Executive Summary

On February 28 (local time), Israel and the U.S. announced strikes against Iran, marking the outbreak of military conflict in Iran. We assess the severity as exceeding that of the “Twelve-Day War” in June 2025. Future developments require monitoring three critical signals: U.S. military deployments, shifts in Iran’s political landscape, and the spillover scope of the conflict.

To analyze potential impacts, we reviewed eight major Middle East conflicts since 1970 and identified the following patterns: Gold outperforms the U.S. dollar as a safe haven; oil prices are driven by fundamentals over the long term; U.S. equities correlate with U.S. military engagement; and Chinese assets show no significant direct effects.

### Sector Impacts & Investment Opportunities

- **Oil shipping**: Geopolitical tensions reinforce the oil shipping cycle; leading tanker operators may see record profits in 2026.

- **Precious metals**: Rising safe-haven demand, accommodative liquidity, and de-dollarization support gold prices.

- **Aluminum**: Supply concerns in the Middle East, paired with strong long-term fundamentals, favor price and valuation gains.

- **Coal**: Escalating Middle East conflicts and Indonesian supply disruptions support coal price expectations.

- **Military trade & materials**: Heightened conflict raises defense sector attention; opportunities exist in military trade and upstream advanced materials.

## Key Signals for Future Scenarios

The February 28 strikes signaled the start of military conflict. As of March 1 (Beijing time, 10:00), the situation remains fluid and more severe than the June 2025 “Twelve-Day War.” Markets may not price in the final outcome in one go but will fluctuate with key signals.

Three critical signals to watch:

1. U.S. military deployments

2. Shifts in Iran’s political landscape

3. Spillover scope of the conflict

Absent major changes in these signals, market impacts may resemble an amplified version of the June 2025 conflict.

**Figure 1: Three critical signals for monitoring Iran’s situation**

*Sources: Xinhua News Agency, CSIS, CITIC Securities Research*

## Impact on Major Asset Classes

The Middle East situation is unlikely to de-escalate quickly. Short-term asset reactions may follow typical patterns for sudden shocks, with future paths highly scenario-dependent.

Our review of eight conflicts since 1970 yields four consistent patterns:

1. **Safe-haven assets**: Gold’s safe-haven attributes generally outperform the U.S. dollar.

2. **Crude oil**: Short-term shocks fade; long-term trends follow supply and demand.

3. **U.S. equities**: Performance tied to U.S. military involvement and war clarity.

4. **Chinese assets**: No significant direct impact from past conflicts.

**Table 1: Review of market impacts from eight major Middle East conflicts since 1970**

*Source: CITIC Securities Research*

**Figure 2: Gold’s safe-haven performance generally stronger than the U.S. dollar in major Middle East conflicts since 1970**

*Sources: Wind, CITIC Securities Research*

**Figure 3: Direct oil price impacts from Middle East wars occur early; effects weaken over time**

*Sources: Wind, CITIC Securities Research*

**Figure 4: U.S. stocks fall initially on risk aversion in U.S.-involved wars; recover as clarity emerges**

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