The recent escalation of tensions in the Middle East has led to a significant surge in crude oil prices, raising concerns about inflation and the potential for stagflation. Arnab Das, Global Macro Strategist, emphasized that the path to a diplomatic resolution between the United States and Iran remains fraught with challenges, particularly regarding Iran's nuclear program and regional activities. Despite the seriousness of the situation, Das believes that financial markets have not fully accounted for the possible economic repercussions, especially if disruptions in the Strait of Hormuz continue. He noted that while OPEC+ can signal future intentions, logistical constraints may hinder their ability to stabilize prices. The impact of rising oil prices is already being felt in natural gas and fertilizer markets, leading to demand destruction in some areas. Moreover, Das warned that persistent tensions could lead to stagflation, characterized by slow growth and rising inflation. However, he remains optimistic about the long-term prospects of the AI sector, which continues to drive equity market performance, suggesting that markets may eventually shift focus back to structural growth themes.