The Economics Show Are investors getting the Iran conflict wrong? With Robin Brooks
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Mar 5, 2026 
Robin Brooks, senior fellow at Brookings and author of Shadow Price Macro, offers macro and market analysis. He explains why oil chokepoints and escalation tail risks worry him more than markets. He highlights key signals to watch like Brent, EM currencies and basis trades. He contrasts Gulf risk premia with Russia‑Ukraine and discusses how dollar reserve status and energy shocks shape outcomes.
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Markets Are Mispricing Hormuz Tail Risk
- Markets are underpricing the tail risk from disruptions around the Straits of Hormuz.
- Robin Brooks points out the Straits handle about 20% of global oil supply and one rocket could create major destabilising supply shocks.
A Rapid Move Toward $90 Threatens Financial Stability
- Oil moving quickly toward $90 would risk broad financial destabilisation beyond energy markets.
- Brooks warns such a spike could hit the S&P, EM currencies, Treasuries and trigger unwind of leveraged trades.
Oil Risk Premium Is Surprisingly Low
- The current oil risk premium is much smaller than after Russia invaded Ukraine despite Gulf supply being more important.
- Brooks compares a ~12% rise now versus ~30% in 2022 and says that implies markets aren't pricing sufficient disruption risk.