How US-Iran tensions could shape world markets

• Oil prices could spike from current $73/barrel to $80 in a contained conflict or $100 if supply is disrupted, potentially adding 0.6-0.7 percentage points to global inflation. Major oil traders have already suspended shipments through the Strait of Hormuz.
• Safe-haven assets are seeing increased demand: Swiss franc is up 3% this year, gold has surged 22% in 2026 to record levels, while bitcoin fell 2% and has lost over 25% in two months, no longer considered a haven.
• Middle East markets face immediate pressure with Gulf equities potentially dropping 3-5%, airlines cancelling flights across the region, and the Israeli shekel expected to be volatile after dropping 5% during the June war.

US-Iran Conflict Threatens Global Markets as Oil Supplies at Risk

The United States and Israel launched strikes on Iran on Saturday, targeting leadership and triggering immediate market concerns. Iran retaliated with strikes toward Israel, escalating tensions in the strategically critical Middle East region.

Oil Market Impact:

Brent crude traded around $73/barrel on Friday, already up 20% year-to-date. The Strait of Hormuz, through which 20% of global oil supply passes, faces potential disruption as major oil companies and trading houses suspended shipments. Capital Economics projects Brent could reach $80 in a contained conflict or spike to $100 in a prolonged scenario, potentially adding 0.6-0.7 percentage points to global inflation.

Market Volatility:

The VIX volatility index has risen 33% this year, compounded by Trump's tariffs and tech selloffs. The dollar index previously fell 1% during June's 12-day Iran war but could strengthen in prolonged conflict as the US benefits from higher energy prices as a net exporter. Israel's shekel typically drops sharply (5% in June) during conflict but rebounds quickly, though JPMorgan warns this time could differ.

Safe Haven Assets:

The Swiss franc is up 3% against the dollar this year and faces further upward pressure. Gold has surged 22% in 2026, hitting record highs, while silver also rallied. US Treasury demand increased as yields fell. Bitcoin dropped 2% Saturday, down 25% over two months, losing safe-haven status.

Regional Impact:

Middle East markets opening Sunday will signal investor sentiment, with Gulf equities potentially dropping 3-5%. European defense stocks, up 10% this year, could see increased demand while airline stocks face pressure from airspace closures and flight cancellations.