Is the forint done for? We haven’t seen a downward spiral like this in years

Escalating conflict involving Iran in the Middle East is beginning to send shockwaves through global markets, driving oil prices sharply higher and weakening several emerging market currencies, including Hungary’s forint.

Forint took a hit on the chin

Oil prices surged dramatically on Friday, with some benchmarks rising by 10–12% in a single day. The price of Brent crude climbed to around USD 93–95 per barrel, compared with roughly USD 72–73 a week earlier. This represents an increase of nearly 30% in just seven days. When the weakening of the Hungarian forint is also taken into account, the price of a barrel in forint terms has risen by almost 40% over the past month, writes 444.

Another major benchmark, West Texas Intermediate (WTI), also saw steep gains, with prices climbing close to 15% during Friday trading and about 32% over the week.

Hormuz Strait disruption threatens oil supply

Market turbulence has largely been triggered by fears surrounding the Strait of Hormuz, a crucial shipping route through which roughly 20 million barrels of oil pass each day. Due to the ongoing conflict, tankers are either unable to pass through the strait or face extremely high insurance costs, significantly restricting supply.