The United States and Israel launched a series of strikes against Iran on Saturday, targeting its leadership and military infrastructure, sending shockwaves across the Middle East and triggering Iranian missile retaliation toward Israel. President Donald Trump framed the operation as a move to neutralize security threats and give Iranians a chance to rise against their rulers, while regional oil-producing nations braced for potential escalation.
Oil markets reacted immediately, reflecting the strategic importance of the Strait of Hormuz, through which roughly 20% of global oil passes. Brent crude, already up 20% this year, traded near $73 a barrel on Friday, and analysts warn that continued disruption could push prices to $80 or even $100 if the conflict prolongs. Such spikes would have knock-on effects, potentially adding 0.6–0.7 percentage points to global inflation. Some oil majors and trading houses temporarily suspended shipments through the Strait of Hormuz, highlighting concerns over supply disruption.
Financial markets beyond oil have also shown increased volatility. The VIX, Wall Street’s fear gauge, has risen sharply this year, and U.S. bond volatility has jumped 15%. Currency markets are sensitive to the unfolding crisis: the U.S. dollar could strengthen if the conflict disrupts oil supply, while safe-haven currencies like the Swiss franc continue to rise. Israel’s shekel, which fell during previous flare-ups with Iran, is likely to remain volatile as missile exchanges continue.
Investors are also moving into traditional safe havens. Gold and silver have surged, with gold up 22% in 2026, while demand for U.S. Treasuries has grown as yields decline. Bitcoin, however, continues to shed value, falling 2% on Saturday and losing over a quarter of its value in two months, reflecting its diminished role as a risk hedge.
Equity markets in the Middle East are expected to reflect the conflict’s impact when bourses reopen. Gulf stock indices could drop 3–5% if hostilities persist, with Saudi Arabia’s TASI index already down 1.3% over the past week and Dubai’s main market showing recent declines. Global airlines have canceled flights in the region, while defence and European weapons stocks could see further gains as the crisis fuels demand for military equipment.
Analysts warn that the strikes’ impact extends well beyond regional geopolitics. With energy supplies at risk, investor sentiment volatile, and military tensions high, the conflict in Iran has the potential to destabilize global markets and disrupt trade flows, underscoring how a single flashpoint in the Middle East can ripple across the world economy.
