Ken Fisher: The Iran War Is Following This Three-Phase Pattern
Ken Fisher outlines a three-phase pattern observed across nine post-1980 energy-centric conflicts, explaining how oil prices and stock markets behave predictably before, during, and after fighting begins. He applies this framework to the Iranian conflict, noting that falling oil prices and rising stocks to all-time highs are consistent with the third phase. Fisher concludes that oil prices 6-12 months after a conflict begins are typically lower than pre-conflict levels.
Summary
Ken Fisher begins by acknowledging that the rapidly evolving Iranian conflict makes specific commentary quickly outdated, but argues that a structural pattern he has identified remains durable and relevant. He references nine energy-centric conflicts in the post-1980 era as the empirical basis for his three-phase framework.
Phase one occurs before fighting begins. As geopolitical tensions build, oil prices rise due to speculative activity in liquid markets — a normal market function driven by uncertainty and risk pricing.
Phase two begins when fighting starts. Markets immediately exacerbate existing fears by pre-pricing worst-case scenarios before sufficient information is available to distinguish those from more realistic outcomes. This causes a sharp spike in oil prices.
Phase three begins as markets gradually process that outcomes are likely to fall short of the worst-case scenarios — possibly approaching best-case outcomes. Oil prices begin to decline and stock markets rise. Fisher explicitly connects this to the Iranian conflict, pointing to falling oil prices and stocks hitting all-time highs as evidence that phase three is underway.
Fisher concludes with a notable historical regularity: six and twelve months after an energy-centric conflict begins, oil prices are consistently lower than they were before the conflict started, settling back into the range established during the initial tension-building period.
Key Insights
- Fisher claims there are nine identifiable energy-centric conflicts in the post-1980 environment, and that they all follow a consistent three-phase pattern in how oil prices and markets behave.
- Fisher argues that in phase one, oil prices rise as geopolitical tensions build before any fighting begins, which he describes as normal speculative behavior in liquid markets.
- Fisher contends that in phase two, markets spike oil prices by pre-pricing worst-case alternatives before they have enough information to assess what will actually happen.
- Fisher asserts that falling oil prices and stocks hitting all-time highs during the Iranian conflict are consistent with and expected in phase three, where markets begin pricing in outcomes less severe than the worst case.
- Fisher states that six and twelve months after an energy-centric conflict begins, oil prices are regularly lower than they were before the conflict started, returning to the range established during the pre-conflict tension period.
Topics
Transcript
[0:00] Since the Iranian conflict began, every week there's endless new things to think about. What I say to you now will almost certainly be out of date very soon. But I'll tell you what I think about it that I think isn't out of date and won't be out of date. There's nine energy ccentric conflicts uh that we can identify uh in the post 1980 environment. Energy ccentric wars follow [0:31] a three-phase process. The first phase is before the fighting starts. You get a little volatility around it, which is normal speculation in liquid markets. But as the tensions build that lead up to a conflict, the price of oil rises with that. That's a normal function.…
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