No Mercy / No Malice: Patient(s) Zero

Scott Galloway warns that amid escalating oil prices from the US-Israel war on Iran, markets are fixated on visible threats like Strait of Hormuz disruptions, but the real danger lurks in vulnerable emerging economies—Bangladesh, Egypt, Pakistan, and Sri Lanka—which could spark a broader financial collapse as patient zero.

Visible Threats and Blind Spots

Global markets have reacted sharply to the war, with equities in the EU, India, Japan, South Korea, and the UAE dropping 8% to 70% since late February, oil reaching $127 a barrel, and the VIX spiking to 42. Yet Galloway argues these "known knowns" are already priced in, while "unknown unknowns" like those in 9/11, 2008's subprime crisis, or COVID-19 pose the greater risk. Oil's Goldilocks zone—above $60 but below $90 per barrel—has been breached, with US gas at $3.70 a gallon stirring stagflation fears. US responses, including releasing 400 million barrels from reserves, failed alliance calls for naval support, suspended Russian oil sanctions, and allowing Iranian shipments, signal limited capacity to ease the strait’s constraints. The key question: not peak oil prices, but duration of elevation, especially as the dollar strengthens to a 10-month high.