War-Driven Repricing: U.S. Defense, Energy & Capital Markets Reset

The ongoing U.S.–Iran conflict is driving a structural repricing across global markets, with energy, defense, and capital flows emerging as key transmission channels. Oil prices above $100 per barrel are fueling inflation, pushing U.S. Treasury yields higher and increasing market volatility, while the U.S. dollar strengthens against emerging currencies. Defense spending has surpassed $960B, with additional wartime funding accelerating demand for munitions, hypersonic, and AI-driven systems. However, supply chain constraints particularly in critical minerals and semiconductors are limiting production scalability. Energy disruption risks of up to 10M+ barrels per day are compressing margins in energy-intensive sectors while benefiting U.S. producers. This environment is shifting capital toward defense, energy, and upstream supply chain assets. The result is a multi-year structural cycle where geopolitical risk, not monetary policy, becomes the dominant driver of investment strategy and asset allocation.