The oil price war has begun.

Author: Anthony J. Pompliano, Founder and CEO of Professional Capital Management; Translated by: Shaw Jinse Finance

The year started with an ideal economic environment. Inflation was falling rapidly, an AI-driven economic boom was underway, the stock market was hovering at record highs, and housing affordability seemed finally on the verge of easing. Investor sentiment was generally optimistic, driving a steady stream of funds into the market.

But in the past few weeks, everything has reversed as the US and Iran have become embroiled in direct military conflict.

Last night, the conflict took a more serious negative turn. First, Israel attacked Iran's South Pars gas field facilities, damaging its processing and refining infrastructure. This missile attack has clearly had a severe impact on the facility's production capacity.

In retaliation, Iran immediately retaliated fiercely, successfully striking Qatar's Ras Raffaele industrial city. This incident is significant because Ras Raffaele is the world's largest liquefied natural gas export base (accounting for approximately 20% of global supply). The extent of the damage is clearly visible in the subsequently released videos. Qatar also reported that several other oil and gas facilities within the country were attacked. US investors were aware of this news early on, and the market reacted negatively to the prospect of a crisis. Daniel Lacalle wrote: “The market is reacting to the risk of a global liquefied natural gas (LNG) crisis, which is far more severe than the oil shock. The oil shock could be quickly mitigated through non-OPEC supplies, alternative energy sources, and flexible allocation systems. However, LNG accounts for only 15% of the global natural gas market, but its supply is extremely tight, making it much more difficult to manage. This is compounded by issues with natural gas regasification and storage.” One of the most intriguing aspects of the market reaction over the past week has been the contradictory signals from different warning indicators. Michael Gay points out: "The bond market is pricing in an economic recession, while oil prices are proclaiming impending inflation. The two cannot both be true simultaneously." However, perhaps both are true, and we are about to enter an extremely unusual period. This stagflation will completely disrupt the prosperous economic situation that began at the start of the year. CNBC discussed this topic in detail yesterday: Therefore, the United States needs to implement several things immediately: Ensuring the safety of the Strait of Hormuz and restoring the smooth flow of global oil transportation routes; Increasing U.S. oil production and exports, including relaxing regulations on the oil and gas industry and accelerating extraction; The US and its allies are releasing strategic petroleum reserves. Simply put, the global oil price war has begun. The higher the oil price, the greater the pain Iran inflicts on the world; the lower the oil price, the greater the room for maneuver for the US and its allies during the ongoing conflict. Unfortunately, the upward trend in oil prices is largely established. This means the US is under time pressure: either end the war quickly and declare victory, or risk a recession in a midterm election year. Given the current situation, it's highly unlikely Trump will allow this to happen, so the entire market is waiting for a policy shift. The only question is, how long will we have to wait? And only the person in the White House knows the answer.