How the Latest Attacks on Iran Are Shaking Global Markets

The renewed U.S.-Israeli strikes on Iran — and Iran’s rapid retaliation — have once again placed global markets on edge.  As in past Middle East flashpoints, the immediate response has centred on oil, inflation expectations, and a broad shift toward safer assets.

Energy Shock: A Familiar Pattern With New Risks

Oil prices surged nearly 10% following reports of Iranian action around the Strait of Hormuz, a chokepoint moving roughly 20% of global oil and gas shipments.  Analysts warn prices could rise toward $100 a barrel if the disruption intensifies. 

Historically, supply-related shocks in the region have produced similar spikes.  During the 1973 oil crisis, Brent crude effectively quadrupled, driving a global inflation wave; more recently, during the 2019 tanker attacks, prices jumped over 4% in a single day before stabilising.  These episodes underline how quickly energy markets can reprice geopolitical risk.

Equities: Volatility Returns

Major indices reacted swiftly.  The FTSE 100 and Asian markets slid, U.S. futures sank before recovering, and Canada and Bangladesh saw sharper declines amid investor repositioning.  Energy and defence stocks bucked the trend, benefiting from expectations of higher demand, while travel and tech shares weakened under pressure. 

Such moves echo historic stress reactions: during the 1990 Gulf War, for example, the S&P 500 fell over 5% in a single week before rebounding as clarity emerged.  Markets today appear similarly sensitive to uncertainty and headline flow.

A Flight to Safety and Rising Inflation Fears

Gold and government bonds saw increased demand as investors reassessed inflation risks.  Rising oil prices often translate into higher consumer costs, and with many central banks still battling persistent inflation, prolonged instability could delay rate-cut cycles. 

What Happens Next?

Market direction now hinges on:

  • Duration of the conflict,
  • Whether the Strait of Hormuz remains open, and
  • How central banks respond to renewed inflation pressures.

History shows markets can recover quickly once geopolitical trajectories become clearer — but the longer uncertainty persists, the more likely it is to reshape global economic conditions

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