Middle East conflict: Global impact
May 2026
Nancy Allen, managing director and head of Data & Analytics at EquiLend, reviews the geopolitical movements in the Middle East and its impact on the market
Image: EquiLend
When the US and Israel began strikes on Iran on 28 February 2026, the International Energy Agency (IEA) Chief Fatih Birol told the BBC that the world was facing “the greatest global energy security challenge in history”. In his words, it was a shock larger than the 1970s oil crisis or the natural gas disruption that followed Russia’s invasion of Ukraine. The near-total closure of the Strait of Hormuz, followed by a US naval blockade of Iranian ports and a tentative, partial reopening, did more than push Brent past US$120 per barrel in March. It sent shockwaves through trading desks worldwide, reshaping borrowing patterns across sectors from jet fuel to solar panels.
For securities lending participants, the conflict has produced a fast-moving, multi-sector short selling event. Across energy infrastructure, utilities, and airlines, EquiLend’s data points in a single direction — shorts believe the market has mispriced what the geopolitical shock means from here. In midstream energy and tankers, they are betting that the scarcity premium fades as Hormuz reopens. In utilities, the defensive flight-to-safety unwinds as fear deflates. And in airlines, where equities have already begun bouncing off their March lows on ceasefire optimism, shorts have not covered, betting that the relief rally is premature and that elevated jet fuel costs will compress margins through the summer travel season regardless of where Brent settles.
Energy: The infrastructure trade and the bet against it
Few sectors have been re-rated as quickly and dramatically as oil and gas storage and transportation since hostilities began. As seaborne crude routes were disrupted, and domestic North American infrastructure became increasingly strategic, midstream operators and tanker names saw their equity valuations climb sharply. Our securities finance data tells the full story: of rising prices, rising loan quantities, and a short selling community making a very specific bet that the conflict ends quickly and the premium evaporates with it.
ONEOK (OKE), a diversified energy company focused on natural gas, is the clearest illustration of this dynamic. At the start of the year, OKE was trading around US$73–74 per share, with approximately 26.2 million shares on loan and utilisation at 9.68 per cent. As the conflict escalated through February and into March, the stock climbed steadily, peaking at over US$95 on 30 March, for a roughly 27 per cent gain from 1 January. This price rally saw shares on loan surge to over 51.8 million by mid-March, representing a near-doubling of short interest from the start of the year, with utilisation climbing to 19.02 per cent.
As peace talks progressed and the Strait of Hormuz partially reopened, OKE did give back some of its gains, pulling back from its March highs as the scarcity premium on US domestic midstream infrastructure began to fade. Yet the picture is far from resolved. EquiLend’s borrow quantity data shows shares on loan stabilising around 50 million, suggesting neither longs nor shorts are prepared to make a decisive move — both sides appear to be in a holding pattern, watching closely for the next development in the Strait before committing further capital.
International Seaways (INSW), a marine shipping company focused on crude oil, presents an equally compelling data picture, but from the tanker side of the trade. INSW, one of the largest US-flagged crude tanker operators, was a direct beneficiary of route disruption and surging spot rates on vessels operating outside the Persian Gulf. The stock moved from approximately US$48–55 per share in early January to a peak above US$76 in late February and early March, as the conflict intensified, representing a gain of over 40 per cent at its high. Shares on loan climbed from roughly 1.4 million at the onset of the conflict to over 2.5 million by late March. The loan value itself surged from approximately US$117 million at the start of the year to over US$156 million by late March, reflecting both higher share prices and elevated borrow demand.
As with OKE, the short thesis is not a fundamental rejection of the business; it is a duration call. Tanker rates are acutely sensitive to geopolitical risk premiums. If the conflict de-escalates and Hormuz flows normalise, the spot rates that have underpinned INSW’s valuation will compress rapidly. Shorts in this name are, in effect, selling the ceasefire trade before it happens.
Turbulence at 35,000 feet: Airlines feel the heat of rising jet fuel costs
Few sectors wear the fingerprints of geopolitical disruption quite as visibly as commercial aviation. When conflict ignites in oil-producing regions, the knock-on effect moves swiftly through the supply chain and lands squarely on the airline industry’s single largest operating cost: jet fuel. With Brent crude spiking amid escalating tensions with Iran, the short selling community has responded with conviction, and our data makes the scale of that conviction impossible to ignore. After an initial sell-off into March, airline equities have bounced on ceasefire progress and the partial reopening of Hormuz, with several US carriers recovering most or all of their year-to-date losses. Yet our data shows shorts have not stepped aside.
At the aggregate level, utilisation across all passenger airlines rose from 7.8 per cent at the start of January to 11.59 per cent by late April, a jump of 3.79 per cent over just a few months. That rate of increase is significant as it reflects not merely opportunistic short selling in one or two names, but a coordinated, broad-based conviction trade against the sector.
At the security level, the moves are even more striking. Delta (DAL) saw loan quantities rise 116 per cent by the end of April, and Alaska Airlines (ALK) climbed 122 per cent. American Airlines (AAL) rounds out the domestic picture with shares on loan up 172 per cent — notable, given a leveraged balance sheet that leaves it acutely exposed to margin compression at current crude levels. Together, the three names point to a broad-based conviction trade across US legacy carriers.
The pressure is equally acute internationally. EasyJet (EZJ LN) leads the pack, with shares on loan up a staggering 4,037 per cent since 1 January, and over 70 million shares now out on loan. Norwegian Air (NAS NO) follows close behind at 1,811 per cent, reflecting acute pressure on a carrier with a limited balance sheet buffer to absorb a prolonged fuel shock. Ryanair (RY4C ID) has emerged as a notable mover at 2,093 per cent. In Asia-Pacific, Japan Airlines (9201 JP) is up 783 per cent, pointing to deeply entrenched short positioning across global aviation markets. Lufthansa (LHA GR) rounds out the picture at 323 per cent, as European carriers face the dual burden of fuel cost inflation and potential airspace rerouting costs tied to the conflict.
Utilities: The safe harbor under siege
Utilities have long served as the market’s security blanket; the sector investors flee to when geopolitical storms darken the horizon. Traditionally characterised by stable dividends, regulated revenue streams, and inelastic demand, utilities should be thriving right now. On the surface, that holds true, but beneath the calm, securities finance data tells a more complicated story.
NextEra Energy (NEE), the largest US utility by market cap, has seen its shares climb to over US$95, up 18 per cent, reflecting investor appetite for defensive exposure. At the same time, loan quantities have climbed steadily through Q1 2026, from a low of 15.2 million to a high of 42 million shares. The market is simultaneously buying the safety narrative while betting against the valuation stretched by it.
Xcel Energy (XEL) tells a similar tale. With shares trading in the low US$80s, up almost 15 per cent, and a market cap approaching US$52 billion, XEL has seen loan quantities surge, peaking at 31 million shares on loan as of late March, up from a low of 10 million in mid-February.
The bottom line
The Iran conflict has handed the securities finance market one of its most active short-interest environments in years. In energy and utilities, that means selling the ceasefire trade before it happens and wagering valuations give back the geopolitical premium as Hormuz reopens and fear deflates. In airlines, it means fading the ceasefire rally before summer fuel costs reassert themselves. Each new development at the Strait, each shift in the ceasefire’s stability, and each tick in jet fuel will continue to shape the securities finance balances and positioning.
For securities lending participants, the conflict has produced a fast-moving, multi-sector short selling event. Across energy infrastructure, utilities, and airlines, EquiLend’s data points in a single direction — shorts believe the market has mispriced what the geopolitical shock means from here. In midstream energy and tankers, they are betting that the scarcity premium fades as Hormuz reopens. In utilities, the defensive flight-to-safety unwinds as fear deflates. And in airlines, where equities have already begun bouncing off their March lows on ceasefire optimism, shorts have not covered, betting that the relief rally is premature and that elevated jet fuel costs will compress margins through the summer travel season regardless of where Brent settles.
Energy: The infrastructure trade and the bet against it
Few sectors have been re-rated as quickly and dramatically as oil and gas storage and transportation since hostilities began. As seaborne crude routes were disrupted, and domestic North American infrastructure became increasingly strategic, midstream operators and tanker names saw their equity valuations climb sharply. Our securities finance data tells the full story: of rising prices, rising loan quantities, and a short selling community making a very specific bet that the conflict ends quickly and the premium evaporates with it.
ONEOK (OKE), a diversified energy company focused on natural gas, is the clearest illustration of this dynamic. At the start of the year, OKE was trading around US$73–74 per share, with approximately 26.2 million shares on loan and utilisation at 9.68 per cent. As the conflict escalated through February and into March, the stock climbed steadily, peaking at over US$95 on 30 March, for a roughly 27 per cent gain from 1 January. This price rally saw shares on loan surge to over 51.8 million by mid-March, representing a near-doubling of short interest from the start of the year, with utilisation climbing to 19.02 per cent.
As peace talks progressed and the Strait of Hormuz partially reopened, OKE did give back some of its gains, pulling back from its March highs as the scarcity premium on US domestic midstream infrastructure began to fade. Yet the picture is far from resolved. EquiLend’s borrow quantity data shows shares on loan stabilising around 50 million, suggesting neither longs nor shorts are prepared to make a decisive move — both sides appear to be in a holding pattern, watching closely for the next development in the Strait before committing further capital.
International Seaways (INSW), a marine shipping company focused on crude oil, presents an equally compelling data picture, but from the tanker side of the trade. INSW, one of the largest US-flagged crude tanker operators, was a direct beneficiary of route disruption and surging spot rates on vessels operating outside the Persian Gulf. The stock moved from approximately US$48–55 per share in early January to a peak above US$76 in late February and early March, as the conflict intensified, representing a gain of over 40 per cent at its high. Shares on loan climbed from roughly 1.4 million at the onset of the conflict to over 2.5 million by late March. The loan value itself surged from approximately US$117 million at the start of the year to over US$156 million by late March, reflecting both higher share prices and elevated borrow demand.
As with OKE, the short thesis is not a fundamental rejection of the business; it is a duration call. Tanker rates are acutely sensitive to geopolitical risk premiums. If the conflict de-escalates and Hormuz flows normalise, the spot rates that have underpinned INSW’s valuation will compress rapidly. Shorts in this name are, in effect, selling the ceasefire trade before it happens.
Turbulence at 35,000 feet: Airlines feel the heat of rising jet fuel costs
Few sectors wear the fingerprints of geopolitical disruption quite as visibly as commercial aviation. When conflict ignites in oil-producing regions, the knock-on effect moves swiftly through the supply chain and lands squarely on the airline industry’s single largest operating cost: jet fuel. With Brent crude spiking amid escalating tensions with Iran, the short selling community has responded with conviction, and our data makes the scale of that conviction impossible to ignore. After an initial sell-off into March, airline equities have bounced on ceasefire progress and the partial reopening of Hormuz, with several US carriers recovering most or all of their year-to-date losses. Yet our data shows shorts have not stepped aside.
At the aggregate level, utilisation across all passenger airlines rose from 7.8 per cent at the start of January to 11.59 per cent by late April, a jump of 3.79 per cent over just a few months. That rate of increase is significant as it reflects not merely opportunistic short selling in one or two names, but a coordinated, broad-based conviction trade against the sector.
At the security level, the moves are even more striking. Delta (DAL) saw loan quantities rise 116 per cent by the end of April, and Alaska Airlines (ALK) climbed 122 per cent. American Airlines (AAL) rounds out the domestic picture with shares on loan up 172 per cent — notable, given a leveraged balance sheet that leaves it acutely exposed to margin compression at current crude levels. Together, the three names point to a broad-based conviction trade across US legacy carriers.
The pressure is equally acute internationally. EasyJet (EZJ LN) leads the pack, with shares on loan up a staggering 4,037 per cent since 1 January, and over 70 million shares now out on loan. Norwegian Air (NAS NO) follows close behind at 1,811 per cent, reflecting acute pressure on a carrier with a limited balance sheet buffer to absorb a prolonged fuel shock. Ryanair (RY4C ID) has emerged as a notable mover at 2,093 per cent. In Asia-Pacific, Japan Airlines (9201 JP) is up 783 per cent, pointing to deeply entrenched short positioning across global aviation markets. Lufthansa (LHA GR) rounds out the picture at 323 per cent, as European carriers face the dual burden of fuel cost inflation and potential airspace rerouting costs tied to the conflict.
Utilities: The safe harbor under siege
Utilities have long served as the market’s security blanket; the sector investors flee to when geopolitical storms darken the horizon. Traditionally characterised by stable dividends, regulated revenue streams, and inelastic demand, utilities should be thriving right now. On the surface, that holds true, but beneath the calm, securities finance data tells a more complicated story.
NextEra Energy (NEE), the largest US utility by market cap, has seen its shares climb to over US$95, up 18 per cent, reflecting investor appetite for defensive exposure. At the same time, loan quantities have climbed steadily through Q1 2026, from a low of 15.2 million to a high of 42 million shares. The market is simultaneously buying the safety narrative while betting against the valuation stretched by it.
Xcel Energy (XEL) tells a similar tale. With shares trading in the low US$80s, up almost 15 per cent, and a market cap approaching US$52 billion, XEL has seen loan quantities surge, peaking at 31 million shares on loan as of late March, up from a low of 10 million in mid-February.
The bottom line
The Iran conflict has handed the securities finance market one of its most active short-interest environments in years. In energy and utilities, that means selling the ceasefire trade before it happens and wagering valuations give back the geopolitical premium as Hormuz reopens and fear deflates. In airlines, it means fading the ceasefire rally before summer fuel costs reassert themselves. Each new development at the Strait, each shift in the ceasefire’s stability, and each tick in jet fuel will continue to shape the securities finance balances and positioning.
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