The US-Iran Conflict Escalates: Oil Surges, Global Stocks Decline, Safe-Haven Assets Climb – Markets Update

Global financial markets reacted sharply to the ongoing US-Iran military confrontation, now in its early days following joint US-Israeli strikes that began late February 2026. The conflict has triggered disruptions in key energy transit routes, heightened geopolitical uncertainty, and prompted a broad shift toward defensive positions.

Equity indices faced widespread selling pressure. S&P 500 futures declined around 1.6%, while Nasdaq 100 contracts dropped 2%. European benchmarks mirrored the trend, with the Stoxx 600 retreating 1.6-1.8% from recent peaks. Sectors sensitive to energy costs and travel demand, including airlines, banking, and automotive, saw steeper losses—some exceeding 3%. British Airways parent IAG fell sharply by 13%.

In Asia and emerging markets, the MSCI Asia Pacific and MSCI Emerging Markets indices both retreated about 1.8%, reflecting concerns over supply chain interruptions and elevated commodity expenses.

Energy markets experienced dramatic moves as the Strait of Hormuz—a critical chokepoint handling roughly one-fifth of global oil shipments and substantial natural gas volumes—faced effective restrictions due to the conflict. Iranian actions, including warnings to vessels and reported attacks on shipping, have curtailed traffic significantly. Brent crude climbed as much as 9-10% in early trading, approaching $80 per barrel (trading near $79.69-$80 levels reported). European natural gas prices spiked up to 25% on fears of broader flow disruptions.

Safe-haven demand intensified. Spot gold advanced 2-2.5%, surpassing $5,400 per ounce (around $5,411 levels noted). The US dollar strengthened notably, with the Bloomberg Dollar Spot Index up 0.7-0.9%—marking one of its largest daily moves in recent months. The euro weakened to about $1.1714, the yen to 157.14 per dollar, and the British pound to $1.3356.

Treasury yields showed mixed behavior: the 10-year US yield rose slightly to 3.96% (up three basis points), reversing portions of prior declines, as inflation worries from higher energy costs offset some flight-to-quality flows. Similar patterns appeared in German and British bonds.

Cryptocurrencies displayed resilience in the risk-off environment, with Bitcoin edging up modestly to around $65,850 and Ether near $1,932.

The conflict stems from US-Israeli operations targeting Iranian military and leadership sites, including the reported killing of Supreme Leader Ayatollah Ali Khamenei and other high-ranking figures. President Donald Trump has stated that operations will persist until objectives—such as curbing nuclear capabilities and missile threats—are met, estimating a potential duration of four weeks or less, while acknowledging possible additional US casualties (three service members confirmed killed so far). Iran has rejected negotiations in some statements and launched retaliatory actions across the region, including strikes on US assets in the Gulf and disruptions affecting neighboring areas like Lebanon.

Market analysts highlight the uncertainty. Julius Baer’s Mathieu Racheter noted that outcomes range from contained resolution to wider regional involvement, with trading driven by probability assessments rather than confirmed developments.

Barclays strategists cautioned against premature dip-buying, pointing to risks of prolonged disruption, potential US losses, and sustained Hormuz issues. A sustained oil spike could complicate fixed-income dynamics, pushing yields higher via inflation channels despite any initial safety bids.

SLC Management’s Dec Mullarkey emphasized the timing, as equities already grapple with high valuations, AI-related anxieties, and credit sector pressures—making commodity-driven cost increases a catalyst for further de-risking.

BNP Paribas traders are monitoring commodity signals for clues on conflict duration.

Key Market Movements (as of early March 2, 2026):

Equities

Stoxx Europe 600: -1.8%
S&P 500 futures: -1.6%
Nasdaq 100 futures: -2%
Dow Jones futures: -1.5%
MSCI Asia Pacific: -1.8%
MSCI Emerging Markets: -1.8%

Currencies

Bloomberg Dollar Spot Index: +0.7%
EUR/USD: $1.1714 (-0.8%)
USD/JPY: 157.14 (-0.7% for yen)
GBP/USD: $1.3356 (-0.9%)

Commodities

Brent crude: +9.4% to ~$79.69/barrel
Spot gold: +2.5% to ~$5,411/ounce

Bonds

US 10-year Treasury yield: +3 bps to 3.96%
German 10-year yield: +2 bps to 2.66%
UK 10-year yield: +10 bps to 4.33%

This developing situation continues to evolve rapidly, with implications for energy security, inflation trajectories, and broader economic stability under close watch.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.