Avoid Stocks, Oil Demand Shock to Spread Across US Economy: Mohamed El

Business Insider • March 31, 2026 • business

Key Points:

Mohamed El-Erian, former CIO of PIMCO, warns investors against buying broad-based stock indexes amid the ongoing Iran war and its economic repercussions, citing increased risks from higher oil prices and potential demand shocks.
He highlights that markets may be underestimating the economic risks of the conflict, as the war has caused a spike in oil prices that could fuel inflation and reduce consumer spending, potentially slowing economic growth.
El-Erian notes that demand destruction, particularly in Asia due to supply shortages and in the US through reduced consumer spending, is already emerging and could worsen if the situation persists.
He outlines a potential sequence of negative effects starting with energy and interest rate shocks, followed by inflation and demand shocks, which could ultimately lead to financial instability if the conflict continues.
Despite some attractive investment opportunities in select stocks, El-Erian advises caution and refraining from buying broad market indexes at this time due to heightened economic uncertainty.

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