Iran military strikes trigger global market shockwaves as oil prices surge, stock indices slide and investors flee to safe havens amid uncertainty
TOI GLOBAL DESK | Mar 02, 2026, 19:24 IST
Global oil prices rise amid US-Israel military actions on Iran, Brent crude at $72.48 per barrel.
Global markets reacted decisively to military strikes on Iran, sending crude oil prices higher and lifting gasoline costs. Equity indices around the world fell, with the travel sector among the hardest hit. Gold and the US dollar gained as investors sought safe havens.
Military strikes on Iran on Monday sent shockwaves through global markets, causing U.S. futures to decline alongside European and Asian markets, while energy prices surged. U.S. benchmark crude oil prices rose more than 8% to $72.70 per barrel, a level not seen since the U.S. summer driving season and the previous Israel-Iran conflict. Brent crude also jumped 9% to nearly $79.19 per barrel. This increase in crude oil costs is expected to translate to higher gasoline prices at the pump in the coming days or weeks as retailers face increased costs for new shipments. The travel sector, encompassing airlines, cruise operators, and global hotel chains, experienced significant declines. Beyond oil, natural gas futures climbed 6%, and futures for transportation and industrial fuels spiked over 14%.
In European markets, Germany's DAX dropped 1.9% to 24,817.42, while France's CAC 40 lost 1.7% to 8,435.80. Britain's FTSE 100 slipped 1% to 10,808.53. Most Asian markets saw share price decreases, with the exception of Shanghai, where higher oil prices boosted some oil company stocks, including CNOOC, China Petroleum & Chemical, and PetroChina, to their 10% trading limit. The Shanghai Composite index advanced 0.5% to 4,182.59. In contrast, Hong Kong's Hang Seng index fell 2.1% to 26,059.85. Japan's Nikkei 225 index initially dropped more than 2% before closing 1.4% lower at 58,057.24. However, shares in defense-related companies like Mitsubishi Heavy Industries and IHI Corp. saw gains, offsetting some of the broader market losses.
India, which could face oil supply disruptions due to the hostilities, saw its Sensex index fall 1.3%. Taiwan's benchmark index declined 0.9%, and Singapore's market dropped 2.3%. Bangkok, a significant tourism hub for the Middle East, experienced a 4% decrease in its SET index. Markets in South Korea were closed for a holiday. Gold, traditionally a safe haven during times of uncertainty, rose 3.1% to approximately $5,408.10 per ounce. The U.S. dollar also strengthened, increasing to 156.88 Japanese yen from 156.27 yen recorded late Friday. The euro weakened, slipping to $1.1740 from $1.1762.
The conflict is anticipated to disrupt oil supplies from Iran and other parts of the Middle East. Attacks in the region, including those targeting two vessels in the Strait of Hormuz, a critical chokepoint for oil exports, have already constrained global oil shipments.
“Roughly one-fifth of global oil and LNG (liquefied natural gas) flows squeeze through the Strait of Hormuz. This is not an obscure canal. It is the aorta of the global energy system,” Stephen Innes of SPI Asset Management said in a commentary.
Prolonged disruptions to Middle Eastern oil flows would have significant consequences for energy markets and all other markets. Energy is a fundamental input for all forms of production.
“Prolonged interruptions to oil flows through the Middle East would have “huge implications for oil and LNG and every market everywhere if it occurs. Energy is an input to ALL production,” RaboResearch Global Economics & Markets said in a report.
Iran exports approximately 1.6 million barrels of oil daily, with a substantial portion destined for China. Should Iran's exports be disrupted, the country may need to seek alternative supply sources, which could further drive up energy prices. China's strategic oil reserve levels are not publicly disclosed. However, a recent estimate from John Kemp of Base Research suggests these reserves range from 1.1 billion to 1.2 billion barrels, equivalent to about 100 days or just over three months of its import needs.
The impact of the conflict on markets was somewhat mitigated because the attacks were anticipated, following a significant buildup of U.S. military forces in the Middle East. This prior positioning allowed traders to adjust their portfolios accordingly. The conflict has also temporarily shifted market focus away from the artificial intelligence issues that had dominated recent trading.
In the bond market, Treasury yields declined as investors sought more secure investment avenues.
“When markets are fragile, they do not need a knockout blow. They just need another weight on the bar,” Innes said.
Adding to the pressure on the broader market was a report released Friday indicating that U.S. wholesale inflation stood at 2.9% last month, considerably higher than the 1.6% economists had predicted. This higher-than-expected inflation could prompt the Federal Reserve to delay interest rate cuts. While lower interest rates typically stimulate the economy and boost investment prices, they also carry the risk of exacerbating inflation.
In European markets, Germany's DAX dropped 1.9% to 24,817.42, while France's CAC 40 lost 1.7% to 8,435.80. Britain's FTSE 100 slipped 1% to 10,808.53. Most Asian markets saw share price decreases, with the exception of Shanghai, where higher oil prices boosted some oil company stocks, including CNOOC, China Petroleum & Chemical, and PetroChina, to their 10% trading limit. The Shanghai Composite index advanced 0.5% to 4,182.59. In contrast, Hong Kong's Hang Seng index fell 2.1% to 26,059.85. Japan's Nikkei 225 index initially dropped more than 2% before closing 1.4% lower at 58,057.24. However, shares in defense-related companies like Mitsubishi Heavy Industries and IHI Corp. saw gains, offsetting some of the broader market losses.
India, which could face oil supply disruptions due to the hostilities, saw its Sensex index fall 1.3%. Taiwan's benchmark index declined 0.9%, and Singapore's market dropped 2.3%. Bangkok, a significant tourism hub for the Middle East, experienced a 4% decrease in its SET index. Markets in South Korea were closed for a holiday. Gold, traditionally a safe haven during times of uncertainty, rose 3.1% to approximately $5,408.10 per ounce. The U.S. dollar also strengthened, increasing to 156.88 Japanese yen from 156.27 yen recorded late Friday. The euro weakened, slipping to $1.1740 from $1.1762.
The conflict is anticipated to disrupt oil supplies from Iran and other parts of the Middle East. Attacks in the region, including those targeting two vessels in the Strait of Hormuz, a critical chokepoint for oil exports, have already constrained global oil shipments.
“Roughly one-fifth of global oil and LNG (liquefied natural gas) flows squeeze through the Strait of Hormuz. This is not an obscure canal. It is the aorta of the global energy system,” Stephen Innes of SPI Asset Management said in a commentary.
Prolonged disruptions to Middle Eastern oil flows would have significant consequences for energy markets and all other markets. Energy is a fundamental input for all forms of production.
“Prolonged interruptions to oil flows through the Middle East would have “huge implications for oil and LNG and every market everywhere if it occurs. Energy is an input to ALL production,” RaboResearch Global Economics & Markets said in a report.
Iran exports approximately 1.6 million barrels of oil daily, with a substantial portion destined for China. Should Iran's exports be disrupted, the country may need to seek alternative supply sources, which could further drive up energy prices. China's strategic oil reserve levels are not publicly disclosed. However, a recent estimate from John Kemp of Base Research suggests these reserves range from 1.1 billion to 1.2 billion barrels, equivalent to about 100 days or just over three months of its import needs.
The impact of the conflict on markets was somewhat mitigated because the attacks were anticipated, following a significant buildup of U.S. military forces in the Middle East. This prior positioning allowed traders to adjust their portfolios accordingly. The conflict has also temporarily shifted market focus away from the artificial intelligence issues that had dominated recent trading.
In the bond market, Treasury yields declined as investors sought more secure investment avenues.
“When markets are fragile, they do not need a knockout blow. They just need another weight on the bar,” Innes said.
Adding to the pressure on the broader market was a report released Friday indicating that U.S. wholesale inflation stood at 2.9% last month, considerably higher than the 1.6% economists had predicted. This higher-than-expected inflation could prompt the Federal Reserve to delay interest rate cuts. While lower interest rates typically stimulate the economy and boost investment prices, they also carry the risk of exacerbating inflation.