The energy shock triggered by the US-Israel strikes on Iran on 28 February 2026 has a structural signature I recognise from the subprime mortgage crisis.
Bear with me while I explain.
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The Strait of Hormuz – a single waterway handling roughly 20% of the world’s oil and liquified natural gas (LNG) – was for all practical purposes closed within days. Oil exceeded $100 a barrel. Qatar invoked force majeure on gas deliveries after drone strikes on Ras Laffan, the world’s largest LNG facility. The International Energy Agency called it the most severe global energy security crisis in history – and yet, right up until it happened, markets were calm. I have seen this before and it is a warning signal that harks back to the beginnings of the global financial crisis.
In 2006, while serving as Head of Market Risk for the Americas at HSBC and tasked with developing stress tests for the US Board of Directors, I asked my team a simple question: how much would subprime mortgage delinquency rates need to increase before single-A rated bonds started taking losses? We selected ten bonds issued in the previous 12 months. The answer was not a caveated or cautionary statement. It was a mechanical calculation: three percentage points, irrespective of the issuer.
Market prices appeared inured to this.
The mortgage-backed securities (MBS) machine kept running despite the structural position indicating almost no margin for error. The actions of our board are why HSBC was one of the few institutions to reduce exposure before the crisis became widely apparent.
The key distinction is this: markets price the absence of visible crisis. They do not price the presence of genuine resilience. These are not the same thing. At the moment of failure, they are opposites.
Three things entrenched this confusion. The Efficient Market Hypothesis implied that a calm market was positive evidence of underlying soundness. Decades of central bank intervention – 1987, LTCM 1998, 2008, Covid 2020 – taught markets that volatility would always be suppressed, so the price of risk fell, which markets read as a reduction in actual risk. Markets punish non-consensus positioning brutally: companies and leaders who act on tail risks that do not materialise on the market’s timetable face immediate penalties in valuation and credibility.
The rational board response is disclosure without action: footnote the risk, satisfy the auditors, avoid the penalty that acting would trigger.
Since January 2023, 338 companies filed 1,168 10-K and 10-Q disclosures citing Red Sea shipping risk – a legally material signal by Securities and Exchange Commission standards, across 20 sectors. The market priced none of it. Disclosed risk and priced risk are not the same thing either.
Nobody had formulated the MBS equivalent question for the Gulf: how much geopolitical escalation was needed to fatally disrupt supply chains with no Hormuz alternative? The answer was in the data, as it was in 2006 – one point of failure for a fifth of global energy trade, no redundancy, a confrontation escalating for decades. None of it was reflected in market prices. The illusion of safety held until it didn’t.
The signals were there for those tracking the right variables. Not market prices, but the interrelation of four structural factors: the coercive leverage one state holds over another through critical dependencies; the fragility of consensus assumptions about institutional stability; whether sufficient policy capacity exists to absorb a shock; and the gap between engineered surface calm and underlying structural resilience.
Tracked together, these told a specific story: the Middle East corridor was above baseline in June 2023, four months before 7 October; Israel at elevated risk for seven consecutive months through the April 2024 direct exchange; four of five focus countries simultaneously stressed in June 2025, eight months before the February strikes.
The divergence between what markets priced and what the structure implied had been widening for nearly three years.
Subprime MBS in 2006 and Iran in 2026 are superficially dissimilar, but the fundamental question is identical: how much pressure can a guardrail, previously considered safe, absorb before it is compromised? In both cases, the answer was knowable before the crisis. In both, boards assigned rational but ineffective probabilities to scenarios beyond their lived experience.
The apparent resilience was never truly load-bearing. The question is whether you test its strength before the event – or discover its limits the hard way.
Martyn Brush is a C-suite financial services executive. He is a co-founder and board member of Fordham Global Foresight.
