UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Deadlines challenge the optimism bias'
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Apr 7, 2026 Discussion of risks to regional infrastructure from US–Iran tensions and how attacks could threaten drinking water in Gulf states. Analysis of how damage to oil facilities could keep prices high even after Strait of Hormuz reopens. Examination of international coordination on safe passage, implications for shipping insurance and defence costs, and why markets often underreact due to optimism bias.
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Optimism Masks Gulf Infrastructure Risk
- Financial-market optimism masks real infrastructure risk from a US–Iran escalation.
- Paul Donovan warns attacks on desalination or oil facilities could prolong oil-price disruption beyond reopening the Strait of Hormuz.
Desalination Damage Threatens Regional Habitability
- Damage to desalination and oil facilities has immediate humanitarian and market effects.
- In some Gulf states over half of drinking water comes from desalination, and oil infrastructure hits could keep prices high even after shipping lanes reopen.
Other Conflicts Amplify Oil Market Disruption
- Global infrastructure links mean other conflicts can amplify oil-price effects.
- Ukraine's strikes on Russian oil facilities and US sanction changes combine with Gulf risks to affect oil-market normalization timing.