By Micah Jonah
March 1, 2026
Global investors are bracing for deeper market turmoil as the escalating Middle East conflict raises fears of a prolonged regional war, power struggles in Iran and fresh shocks to oil prices and inflation.
The joint United States-Israel strikes that reportedly killed Iran’s Supreme Leader, Ayatollah Ali Khamenei, have intensified uncertainty across financial markets. Iran’s retaliation against Gulf cities, flight suspensions and disruptions to tanker traffic through the Strait of Hormuz have heightened concerns over global trade and energy supplies.
Analysts say the immediate risk lies in uncertainty over Iran’s political future, given the complex power structure of the Islamic Republic and the influence of its Revolutionary Guards. A potential leadership vacuum or internal struggle could magnify instability across the oil-rich region.
Oil prices, already rising in recent weeks, are now increasingly vulnerable to supply disruptions. Brent crude is up roughly 20 percent this year, hovering around $73 per barrel. Some economists warn that a prolonged conflict could push prices toward $100 per barrel, potentially adding up to 0.7 percentage points to global inflation.
While investors have traditionally sought refuge in assets such as US Treasuries and gold during geopolitical crises, analysts caution that oil-driven inflation could limit the protective role of bonds. Gold, which recorded a strong rally last year, is up about 22 percent so far in 2026, reflecting heightened safe-haven demand.
Market strategists warn that investors may be underpricing the risk of a wider conflict. Comparisons have been drawn to previous short-lived flare-ups, but some experts argue that the scale of the current escalation could produce longer-lasting economic consequences.
Equities remain vulnerable to sharp swings when markets reopen, with some analysts advising caution against buying early dips. Others suggest that if tensions ease quickly, markets could stabilise and even rebound.
Beyond energy markets, concerns are also emerging around broader financial vulnerabilities, including private credit markets and valuations tied to the artificial intelligence boom.
As the conflict unfolds, volatility is expected to dominate trading sessions worldwide, with investors closely monitoring developments in Iran, oil-producing nations and key global shipping routes.
