US-Israel Strikes on Iran Trigger Market Turmoil and Oil Price Concerns
A plume of smoke rises following a reported explosion in Tehran on February 28, 2026. (Photo by AFP via Getty Images)
Market watchers are bracing for turbulence after the U.S. Confirmed it has launched “major combat operations” in Iran, a move investors say could carry far greater market consequences than recent geopolitical flare-ups. The strikes, conducted in coordination with Israel, have raised fears of a wider regional conflict and a potential disruption to global oil supplies.
US and Israel Launch Attacks, Iran Condemns “Gross Violations”
U.S. President Donald Trump confirmed on Saturday that U.S. Military operations against Iran are underway. Israel likewise launched an attack on Iran’s capital, Tehran, with explosions reported in key cities across the Middle East, including Jerusalem, as Iran launched counterattacks as reported by CNBC. Trump stated that Iran has continued to pursue nuclear weapons despite ongoing negotiations to conclude its program.
Iran has harshly condemned the attacks, accusing the U.S. And Israel of “grossly violating” Iran’s territorial integrity and national sovereignty according to CNBC.
Supreme Leader Reportedly Killed in Strikes
President Trump announced that Iran’s Supreme Leader, Ayatollah Ali Khamenei, has been killed in the strikes as reported by the BBC. State media reported that Khamenei’s daughter, son-in-law, and grandchild were also killed in the attacks. Reports from the Fars News Agency, affiliated with the Islamic Revolutionary Guard Corps, suggest one of Khamenei’s daughters-in-law may also have been killed according to the BBC.
Market Reaction: Oil Prices and Flight to Safety
Investors are bracing for a volatile market open on Monday. Florian Weidinger, CIO at Santa Lucia Asset Management, stated, “This has definitely bigger ramifications than Venezuela,” noting the greater risk to global oil supplies as reported by CNBC. Venezuela’s heavy crude is specific to certain refineries, while Iran’s location makes it a critical “chokepoint” for oil transit.
Approximately 13 million barrels of crude oil transited the Strait of Hormuz in 2025, representing roughly 31% of global seaborne crude flows according to data from Kpler cited by CNBC. Analysts anticipate a potential flight to safety, with a strengthening of the U.S. Dollar, Japanese yen, and increased demand for gold.
Alicia García-Herrero, chief economist for Asia-Pacific at Natixis, expects a “rough and risk-off” open on Monday, with global equities potentially down 1% to 2% or more, U.S. Treasury yields falling 5 to 10 basis points, and oil jumping 5% to 10%.
Duration of Conflict Will Determine Market Impact
The market impact will largely depend on the duration and scope of the conflict. If the conflict remains short and contained, the risk-off move and oil spike could be brief. However, a prolonged, three-to-five-week “regime change endeavor” could lead to a more severe market reaction, with investors pricing in a wider conflict and longer oil disruption as noted by Quantum Strategy’s David Roche in a CNBC report.
A prolonged retaliation by Iran would particularly impact Asian markets, given their reliance on stable energy supplies and trade routes, according to Billy Leung, investment strategist at Global X ETFs.