<p>As the situation in the Middle East worsens, leading to oil prices soaring above $100, the market is concerned about a repeat of the 1970s energy crisis. Chinese economist Ren Zeping's analysis platform &#34;Zeping Macro&#34; pointed out that looking back at the two oil crises of the 1970s, there were &#34;five major patterns&#34; that ultimately led to pressure on global stock markets. Whether the U.S.-Iran war will repeat the 1970s energy crisis depends on whether the conflict is a quick resolution lasting a few weeks or extends for several months. If the war lasts longer than expected, it could trigger inflation and expectations of monetary tightening, affecting global asset pricing and leading countries to increase energy and arms races.</p>
<h2>The First Oil Crisis in 1973</h2>
<p>The article notes that the first oil crisis occurred from 1973 to 1974, during which the hot war lasted only 20 days but had far-reaching effects. Arab oil-producing countries announced an oil embargo against the U.S., Netherlands, and other countries in retaliation for Western support of Israel, raising oil prices by 70% and reducing oil production by 5% each month until Israeli troops withdrew. As a result, oil prices skyrocketed from $3 per barrel to nearly $13 in just three months, triggering a resource crisis and significant changes in asset prices.</p>
<p>It is worth noting that the Bretton Woods System collapsed in 1971, during a period when the war coincided with the decoupling of gold and the dollar, shaking the credibility of the dollar. Gold entered a super bull market lasting a decade, with prices soaring 9.5 times from 1973 to 1980. In contrast, affected by high oil prices and stagflation, the U.S. stock market's Dow Jones Industrial Average plummeted over 45% during the bear market from 1973 to 1974, with stock markets in the UK and Japan also suffering significant setbacks.</p>
<h2>The Second Oil Crisis in 1978</h2>
<p>The second oil crisis occurred between 1978 and 1980, when Iran, as the world's second-largest oil exporter, experienced the Islamic Revolution in 1979, leading to a 60-day halt in oil exports and causing panic buying in the market, with oil prices soaring from $13 to $34. By 1980, the Iran-Iraq War fully erupted, disrupting approximately 4 million barrels of oil per day from both countries, accounting for 15% of OPEC's production, further pushing oil prices to a historic high of $41.</p>
<p>However, gold prices this time showed a pattern of rising and then falling, without a long-term increase. Although during the Iranian Revolution, global inflation, and geopolitical panic from 1979 to 1980, gold prices rose by 285% to $675.3 in January 1980 compared to April 1978, after entering the prolonged Iran-Iraq war, market risk aversion gradually eased, and the average annual gold price fell below $300 in 1982.</p>
<p>In the U.S., the surge in oil prices triggered a retaliatory inflation spike to 15%. Then-Federal Reserve Chairman Paul Volcker continuously raised interest rates from August 1977 to March 1980, with rates peaking above 19%, an increase of over 1400 basis points, causing the U.S. economy to fall into recession in 1980 and 1982, with the stock market also remaining under pressure</p>
<h2>Summarizing Five Major Rules: Asset Prices &#34;Three Steps&#34;</h2>
<p>From these two historical segments, the article summarizes five major rules. First, on the surface, it appears to be a historical dispute, but behind it is a struggle for resources, with the focus always being on oil from ancient times to the present; second, asset prices follow a &#34;three-step&#34; process: the first stage is driven by emotions, leading to a rise in safe-haven assets; the second stage is the transmission of inflation, resulting in rising commodity prices and differentiated corporate profits; the third stage is inflation triggering monetary policy tightening, putting pressure on the stock market, bond market, and gold.</p>
<p>Third, the impact of oil prices depends on the degree of &#34;supply-demand tight balance.&#34; During the previous two oil wars, oil accounted for over 40% compared to coal, and the Middle East's exports accounted for 60% of the global market, creating a highly dependent structure that amplified the impact; fourth, gold serves as a short-term safe haven but returns to its three main attributes in the long term. Fifth, global stock markets are under pressure; if an energy crisis and inflation occur, monetary policy will be forced to tighten, corporate profits will be eroded by inflation, and there will be suppression from risk aversion and risk-free interest rates.</p>
<p>Regarding U.S. President Trump's initiation of the &#34;third energy war,&#34; the article believes there are four main objectives behind it, including controlling key resources, maintaining the financial hegemony of the &#34;petrodollar&#34; system, serving the midterm elections, and encouraging the return of manufacturing. At the same time, the recent U.S. military raid on Venezuela exceeded expectations; the event did not escalate into a prolonged regional conflict, Venezuela quickly capitulated, and the U.S. reaped significant oil benefits, with limited reactions from the capital market, giving Trump great confidence to launch an attack on Iran.</p>
<h2>If the Conflict Persists, It Will Affect Global Asset Pricing</h2>
<p>Regarding the impact of the current U.S.-Iran war on asset prices, the article believes that the U.S.-Iran conflict is evolving into a &#34;moderate intensity regional conflict.&#34; The impact on asset prices depends on whether the conflict is resolved quickly, lasts for several weeks, or extends for several months. If the duration of the war exceeds expectations, it may trigger inflation, leading to expectations of monetary tightening, affecting global asset pricing, and prompting countries to increase energy and military competition.</p>
<p>Among various assets, if the U.S.-Iran conflict and the blockade of the Strait of Hormuz continue, oil exports will significantly decline, and oil prices may surge; gold prices will benefit from safe-haven sentiment but may be negatively impacted by inflation expectations, and in the long term, will still be affected by de-dollarization; the stock market is expected to be under overall pressure, primarily due to rising oil prices eroding corporate profits, which may trigger rising interest rates, especially negatively impacting technology and high-debt industries, while the resource and energy sectors may benefit from price increase expectations and are likely to perform independently.</p>
<p>In addition, Iran not only has oil but also rich natural gas, urea, ethylene, methanol, and other production capacities, with natural gas accounting for about 17% of the world's total reserves, ranking second globally. Urea production accounts for 5.42% of global total production, methanol production accounts for 9.2% of global total production, and electrolytic aluminum production accounts for 0.8% of the global total. If the conflict continues, a price surge cannot be ruled out</p>

GDXJ

<p>As the situation in the Middle East worsens, oil prices have surged to over $100, raising market concerns about a repeat of the 1970s energy crisis. Analysts point out that historically, two oil crises exhibited five major patterns, leading to pressure on global stock markets. The duration of the conflict will affect inflation and monetary policy, which in turn will impact global asset pricing. The oil crises of 1973 and 1978 respectively triggered significant increases in oil prices and stock market crashes, yet gold prices did not necessarily benefit</p>

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Oil prices soaring may repeat the energy crisis of the 1970s. Learning from history reveals 5 major rules; gold prices may not necessarily benefit