Markets brace for impact following U.S. military strikes against Iran
A cloud of smoke rises following an explosion that reportedly occurred in Tehran on February 28, 2026. (Photo: AFP via Getty Images)
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Market watchers are bracing for turbulence after investors confirmed the US had launched “major combat operations” in Iran. Investors say this move could carry market ramifications far greater than recent geopolitical flare-ups.
US President Donald Trump said that the US military has started “major combat operations” in Iran.
According to Reuters, an unidentified Iranian official said that many ministries in the south of Iran’s capital Tehran were targeted.
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Markets were unaffected and accustomed to absorbing recent geopolitical and economic shocks and headlines, including Trump’s announcement that the US would raise tariffs on all imports to 15% and the administration’s take on former Venezuelan President Nicolás Maduro.
“This definitely has bigger implications than Venezuela,” said Florian Weidinger, CIO of Santa Lucia Asset Management.
“Venezuela … only really made sense for people who cared about this heavy crude,” Weidinger told CNBC. The country’s heavy, sour crude can be difficult to extract, although it is prized by certain, sophisticated refineries, especially in the United States.
“So it’s a bigger risk. As a result, you’d expect oil to rise a little more strongly next week,” he added.
Oil will be ignited, security will return
“Venezuela was a production story. [Iran] “It’s a dead end story,” said Kenneth Goh, director of private wealth management at UOB Kay Hian in Singapore.
Located in the gulf between Oman and Iran, the strait is considered one of the most important oil transit points in the world. According to data from market intelligence firm Kpler, approximately 13 million barrels of crude oil passed through the Strait of Hormuz per day in 2025; this accounts for approximately 31% of global seaborne crude oil flows.
In June 2025, when Israel struck Iran’s nuclear facilities, stocks sold sharply at the open, then recovered when it became clear that the strait was intact.
“This is the model that the markets will reference on Monday,” Goh said, adding that there could be a safe escape with the strengthening of the US dollar, the Japanese yen and the gold rush.
Other market observers echoed the same. Alicia García-Herrero, chief Asia-Pacific economist at Natixis, similarly expects a “rough and risk-off” opening on Monday, with global stocks potentially down 1% to 2% or more, U.S. Treasury yields falling 5 to 10 basis points, and oil up 5% to 10%.
But he warned that investors should wait for Iran’s reaction, saying “there is no heroic claim”.
Short campaign and ‘regime change effort’
However, some money managers said risk aversion has been building for weeks, potentially providing some cushion against initial volatility once trading begins.
Some cross-asset movements already reflect “some crisis environment,” Weidinger said, citing strong demand for oil and Treasury bonds that have strengthened in recent weeks.
While the markets are waiting for this development, investors are closely watching whether the USA’s latest move remains a short and intense campaign or turns into a long-term regional conflict.
Quantum Strategy’s David Roche framed the market impact in terms of duration and whether Iran will try to close the Strait of Hormuz. He said that if the conflict is short-lived and brought under control, the risk-off movement and the rise in oil prices could be short-lived.
If this turns into a longer “regime change effort” of three to five weeks, markets will react “pretty badly” as investors price in a broader conflict and a longer disruption in oil.
Billy Leung, chief investment strategist at Global
