LONDON, March 13 - Financial markets, unsettled by a new Middle East war that could rekindle inflationary pressure, are looking back to how markets moved after Russia's February 2022 invasion of Ukraine for guidance on likely outcomes. Much like that earlier episode - when the global economy was emerging from the COVID-19 pandemic and energy price jumps compounded already rising inflation - investors are parsing which patterns may repeat and which will differ.
Summary of the parallels
Some market moves mirror those seen in early 2022: energy prices have surged and the U.S. dollar has strengthened. But other assets have reacted differently this time, influenced by geographic distance from the fighting and by altered market structure since the pandemic years.
Energy shock and market mechanics
Energy markets have been the most direct conduit of market stress. Brent crude has climbed about 40% since the U.S.-Israel strikes two weeks ago and was closing in on $120 a barrel on Monday. That pace of increase is notably steeper than the move at the same point after Russia's invasion in 2022, when Brent was roughly 15% higher at the two-week mark and later hit levels not seen since 2008.
"The oil market has moved from an essentially frictionless supply-side world for the decade or two before the pandemic, to what is now a world that is being consistently hit by one supply shock after another," said Richard de Chazal, a macro analyst at William Blair, describing how the supply picture has changed and heightened sensitivity to disruptions.
That direct line from the conflict to energy has translated into outsized moves in some energy-specific measures. The CBOE oil volatility index reached a five-year high of 120%, eclipsing the 102 peak recorded after Russia's 2022 invasion.
Currency and inflation signals
The dollar has rallied 2.6% since the Middle East war began, matching its gain over the same number of days in 2022. Markets have also been quicker to factor in the potential for higher inflation than they were at the outset of the Russia-Ukraine conflict. For example, the euro zone's five-year forward inflation swap remains near 2.18%, close to the European Central Bank's 2% target, and has not shown the kind of sharp spike seen in 2022.
George Lagarias, chief economist at wealth manager Forvis Mazars, noted a familiar undercurrent. "There are some parallels, in the sense that the global economy is weak now because of the trade war," he said. "There is an underlying inflationary force, which is the trade war, that could be exacerbated by a hike in oil prices." He also downplayed the probability of an immediate policy reaction from central banks, saying they would want to see sustained core inflation prints for two to three months before shifting course.
Safe havens and fixed income
Despite the energy-driven tension, reactions among traditional safe havens have varied from 2022. Germany's 10-year Bund yield has risen about 30 basis points since the Iran war began, a reversal from the more than 10 basis point fall seen four years ago. That contrasts with the Eurozone inflation swap's relative calm and signals that markets are already pricing in inflation risks to a greater extent this time.
Gold, which surged almost 8% when Russia invaded Ukraine, has moved in the opposite direction since the Iran war erupted, falling about 3%. RBC strategist Christopher Louney attributed gold's weakness to a clearer connection between the crisis and energy markets that reduces demand for a broad-based hedge, while higher bond yields and a stronger dollar also weigh on the metal.
The ICE BofA MOVE index, a gauge of bond-market volatility, has climbed to 95 - its highest level since June 2025 - but remains below the early March 2022 peak of about 140.
Equities and regional exposure
European shares have drawn a direct comparison with 2022, though the magnitude differs. In 2022 European equities plunged roughly 10% within the first two weeks; this time they have fallen about 5%. The earlier episode hit Europe particularly hard because of its geographic proximity to Russia and its energy dependence on Russian supplies. While the Middle East conflict is more distant, Europe remains exposed through its energy import needs.
Barclays equity strategists warned that if oil were to hold near $100 a barrel, the STOXX 600 index could trend toward 550 points - roughly a 13% decline from its closing level on February 27.
One structural difference is that European markets entered this crisis from different conditions than in 2022. Shares had been trading near record levels following a period of diversification away from U.S. assets and stimulus support, whereas in early 2022 equities had already been retreating in advance of the Russian invasion.
Volatility beyond oil
Outside the energy complex, volatility measures are elevated but not uniformly at crisis peaks. The VIX index of equity volatility sits around 25 - firm but well below the April 2025 high of 60 and far beneath the COVID-era extremes of about 80. By comparison, the VIX touched a high of 38 in February 2022 before easing.
FX volatility has been relatively muted and has barely moved since the conflict began, suggesting that currency markets have not seen the same stress levels as energy and some fixed income sectors.
Conclusion
Markets are weighing a set of forces that resemble the early stages of the Russia-Ukraine shock - a pronounced energy price impulse and a stronger dollar - but the transmission to other asset classes differs. Geographic exposure, prior market positioning and the specific channels through which the Middle East conflict affects supply and demand help explain why some indicators have diverged from the 2022 script.