Force Majeure Hits Oil Prices; WGA Updates the Precious Metals Top 25

"Gold is money. Everything else is credit"

J.P. Morgan

1912

March 10, 2026 | In this Premium Service edition of The Institutional Risk Analyst, we update our readers on the WGA Precious Metals Top 25 in the wake of the war with Iran and various other developments in the world of risk. The good news is that the US bond market has largely run in place and most major sectors outside of credit and energy are stable. Could it be that the world is eventually going to shrug off the US-Israeli military onslaught against Iran?  

When we saw the vicious backwardation in oil prices this week, and the equally steep slope down in the price of oil going into the out months, we were struck by this dichotomy.  Likewise the relative stability in the US Treasury market, with the ten-year note still confined to that 4.10-4.20% range that has prevailed all year and long-before the new conflict with Iran, suggests that the current kerfuffle in the media is overdone. Equity markets closed up yesterday, oil prices were down 24% and the key 10-year Treasury note fell in yield.

Source: dataCollab

That said, the price of oil has basically doubled in a few weeks and is likely to remain elevated for weeks or months more unless and until the US Navy and the militaries of other nations can re-open the Strait of Hormuz. Higher oil prices may be a fact of life for months ahead, a result that is unlikely to be helpful to the Trump Administration in the approaching midterm elections. Shanaka Anslem Perera wrote in an excellent post on Substack: 

“At midnight Greenwich Mean Time on 5 March 2026, seven of the twelve International Group Protection and Indemnity clubs that collectively insure roughly 90% of the world’s ocean-going tonnage executed identical cancellation notices for war-risk coverage across the Persian Gulf, the Gulf of Oman, and Iranian territorial waters… This is not a geopolitical risk overlay. This is the first live demonstration of Actuarial Warfare: a paradigm in which private reinsurance desks, operating under regulatory capital constraints, exercise de facto sovereignty over the planet’s most critical maritime chokepoint more durably than navies, missiles, or executive orders.”

In simple terms, the global insurance coverage for oil shipments must be restored before energy and chemicals will move and oil prices will come down. But so far the forward oil market is suggesting that prices will fall in a matter of weeks or months. In comments to CBS News Monday afternoon, President Donald Trump said the war in Iran is "very complete, pretty much," and that the US is "very far" ahead of the timelines the military had projected.

Notice that like banks, Perera notes, the global risk insurers are also laboring under regulatory capital constraints that change their behavior in the markets. Watch oil prices for delivery later this year for a good measure of how that process of re-opening Hormuz is proceeding. In the meantime, will the oil price spike and/or the collapse of private credit take down the rest of the global financial market? We think not.

Symbolizing the pervasive Street pessimism, Wall Street icon Ed Yardeni raised the probability of a market meltdown to 35% for the rest of the year, up from 20% previously, Yahoo Finance reports. “At the same time, he slashed the odds of a meltup — a rally driven more by investor enthusiasm than underlying fundamentals — to just 5% from 20%,” Yahoo Finance opined. But looking at the broad market including banks and large financials, the picture is placid.

Meltup is pretty much been the characteristic of the US markets for the past several years. That said, the difference in performance between the leading banks represented by JPMorgan (JPM), BlackRock (BLK) and private credit giant ARES Management (ARES) is striking. JPM is still up double digits over the past year, BLK is barely down and ARES is down double digits. But these particular performance trends were already established before the Iran conflict began as shown in the chart below.

Are the gyrations of the major credit shops a systemic risk to the markets? In our view, no. The non-depository financial institutions that we track in our finance group are tiny. Indeed, outside of insurance, most nonbank finance companies in all industry sectors are tiny. This is not to suggest that they don’t matter to the markets or the economy, but the typical nonbank like Apollo or Areas is not nearly systemic. Indeed, the entire private credit sector could collapse tomorrow and the major result would be losses to credulous investors and a great deal of litigation.  

Meanwhile, the patterns impacting the metals markets also remain strong. We have warned previously that metals will be volatile because they are the ultimate macro assets. Gold and silver combine the long-term attraction of a monetary asset with the industrial demand of technology, two reasons why we follow the physical markets in metals as well as oil to figure out what is really happening.

Premium Service subscribers to The IRA may login to review the latest results for The WGA Precious Metals Top 25 and also download the entire 36-name test group. Some thoughts on the performance of the Precious Metals Top 25 group follow below.

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