Global Markets Shaken by Military Strikes on Iran: What You Need to Know

Military strikes on Iran have caused significant turmoil in global markets, leading to sharp declines in stock indices and surging energy prices. As oil prices rise, concerns grow over potential disruptions to supply chains, particularly for countries reliant on Iranian oil. This article delves into the market reactions, the implications for various sectors, and the broader economic impact, including inflation and interest rate considerations. Stay informed about how these developments could affect your investments and the global economy.

By Narendra Chaudhary Mar 2, 2026, 19:20 IST

Market Reactions to Military Actions

On Monday, military actions targeting Iran sent shockwaves through global financial markets, leading to declines in US futures that mirrored earlier downturns in European and Asian markets. Energy prices surged significantly.

Both the S&P 500 and Dow Jones Industrial Average futures dropped by approximately 1%.

The cost of US benchmark crude oil soared over 8%, reaching USD 72.70 per barrel, a level not seen since the summer driving season and the recent Israel-Iran conflict. Meanwhile, Brent crude oil prices jumped nearly 9% to USD 79.19 per barrel.

This increase in crude oil prices is likely to be reflected at gas stations within days or weeks, as retailers will face higher costs for new gasoline shipments.

The travel industry, encompassing airlines, cruise lines, and major hotel chains, experienced significant declines.

In addition to oil, natural gas futures rose by 6%, while transportation and industrial fuel futures surged over 14%.

Germany's DAX index fell by 1.9% to 24,817.42, and France's CAC 40 dropped 1.7% to 8,435.80. The UK's FTSE 100 also slipped by 1% to 10,808.53.

Most Asian markets saw declines, although Shanghai's market benefitted from rising oil prices, boosting stocks of companies like CNOOC, China Petroleum & Chemical, and PetroChina to their 10% limit.

The Shanghai Composite index increased by 0.5% to 4,182.59, while Hong Kong's Hang Seng index fell by 2.1% to 26,059.85.

Japan's Nikkei 225 index initially dropped over 2% but closed down 1.4% at 58,057.24, with defense-related stocks like Mitsubishi Heavy Industries and IHI Corp. showing gains.

In India, concerns over potential oil supply disruptions led to a 1.3% decline in the Sensex.

Taiwan's benchmark index fell by 0.9%, and Singapore's market dropped by 2.3%. Bangkok's SET index, a key tourism hub for the Middle East, fell by 4%.

South Korean markets were closed for a holiday.

Gold, often viewed as a safe investment during uncertain times, rose by 3.1% to approximately USD 5,408.10 per ounce.

The US dollar strengthened, climbing to 156.88 Japanese yen from 156.27 yen late last week, while the euro dipped to USD 1.1740 from USD 1.1762.

The ongoing conflict is expected to disrupt oil supplies from Iran and other Middle Eastern countries. Recent attacks on vessels in the Strait of Hormuz have already limited oil exports globally.

Stephen Innes from SPI Asset Management emphasized the significance of the Strait of Hormuz, stating, "Roughly one-fifth of global oil and LNG flows squeeze through the Strait of Hormuz. This is not an obscure canal. It is the aorta of the global energy system."

Prolonged disruptions in oil supply from the Middle East could have severe consequences for oil and LNG markets worldwide, affecting all sectors reliant on energy.

Iran currently exports about 1.6 million barrels of oil daily, primarily to China. Should these exports be hindered, it may need to seek alternative sources, further driving up energy prices.

China's strategic oil reserves remain a closely guarded secret, but estimates suggest they range between 1.1 billion to 1.2 billion barrels, sufficient for around 100 days of imports.

Market reactions to the conflict were somewhat tempered, as the military actions were largely anticipated due to the significant buildup of US forces in the region, allowing traders to adjust their strategies accordingly.

The current conflict has shifted focus away from recent discussions surrounding artificial intelligence that have dominated market narratives.

In the bond market, Treasury yields fell as investors sought safer investments.

Innes noted, "When markets are fragile, they do not need a knockout blow. They just need another weight on the bar."

Additionally, a report released on Friday indicated that inflation at the wholesale level in the US reached 2.9% last month, significantly higher than the 1.6% economists had predicted.

This inflation data may pressure the Federal Reserve to delay interest rate cuts, which could provide a boost to the economy and investment prices but also risk exacerbating inflation.