The US-Iran conflict rapidly escalates, sparking concerns. Which markets benefit, and which are dragged down? Read to understand.

Investors are closely watching the weekend attack on Iran and the potential impact on the markets. The oil market and energy supply face particularly notable threats.

Iran produces about 3.3 million barrels of crude oil daily, accounting for 3% of global output, making it the fourth-largest OPEC oil producer. However, due to its strategic location, Iran’s influence on global energy supplies far exceeds its production volume. Located near the Strait of Hormuz, about one-fifth of the world’s oil is transported through this passage, mainly from key suppliers like Saudi Arabia and Iraq.

Real-time data from the International Tanker Tracking System shows that ships near the Strait of Hormuz have generally slowed to a halt, indicating shipping has stalled in the area. Media reports also indicate that, although the strait remains open, some oil tankers are rerouting, causing congestion at the entrances on both sides.

Triggering Oil Market Concerns

The oil market is closed for the weekend, so there are no immediate trading data. However, Barclays analysts wrote on Saturday: “The oil market may face the worst-case scenario on Monday. Given the current situation, we believe Brent crude could reach $100 per barrel. The potential impact on the oil market cannot be overstated.”

The bank suggests investors should expect oil prices to test the $100 per barrel level on Monday, representing about a 35% increase. After a sharp decline last year, international crude prices have steadily recovered, with Brent crude up 20% so far this year.

Jorge Leon, Head of Geopolitical Analysis at Rystad Energy, said: “If there are no signs of de-escalation over the weekend, risk premiums could push Brent crude prices up by $10 to $20 per barrel next Monday.”

“How Tehran responds in the next 24 to 72 hours—especially regarding energy infrastructure or regional shipping—will be a key driver of recent oil market dynamics,” he added.

Meanwhile, rapid increases in energy prices could also raise inflation expectations, putting pressure on business activity and consumer spending.

Deutsche Bank’s latest report states: “Positive supply shocks in oil prices will have a significant impact on inflation expectations and risks,” adding that oil shocks are a major risk to its 2026 economic outlook.

Goldman Sachs analysts previously predicted that serious conflict with Iran would have a significant adverse effect on the economy, sharply increasing recession risks. After last summer’s attack on Iran’s nuclear facilities, Goldman Sachs warned that if Iran were to blockade the Strait of Hormuz long-term, Brent crude could surge to $110 per barrel in the worst-case scenario.

Defense and Energy Stocks May Rise

Historically, conflicts threatening oil supplies tend to lead to short-term gains in energy stocks and boost defense stocks.

So far this year, the iShares U.S. Aerospace & Defense ETF has risen 14%. The ETF surged immediately after the Venezuela attack incident and has been active again this month amid rising tensions between the U.S. and Iran.

Meanwhile, the iShares S&P Global Energy ETF has steadily increased by 24% this year, as markets remain attentive to how various conflicts could impact global supply.

Impact on Various Assets

Over the past year, geopolitical conflicts have been a key factor driving gold prices above $5,000 per ounce, and confrontation with Iran could serve as a new catalyst for further gold price increases. At the same time, risk aversion has generally risen, potentially boosting U.S. Treasury prices and lowering yields.

While stock markets may decline as investors digest the news, long-term negative reactions are not guaranteed. Geopolitical events often cause only fleeting impacts on stocks; even if armed conflicts persist, markets can rebound.

“If the S&P 500 energy sector rallies in the morning on Monday but fades by the afternoon, we wouldn’t be surprised. Similarly, if the morning sell-off turns into a rebound, that wouldn’t surprise us either,” said Ed Yardeni, founder of Yardeni Research and a veteran Wall Street analyst, on Saturday.

Nevertheless, Barclays analysts caution investors: Don’t be overly optimistic that the latest U.S.-Iran conflict will be a controllable, short-lived event, and avoid buying on dips.

“A conflict lasting more than a few days—especially if investors are caught off guard when it erupts—should trigger more pronounced negative reactions. We advise against buying stocks immediately during declines—risk-reward doesn’t look attractive,” the analysts wrote. “If the stock market drops significantly (for example, the S&P 500 falls more than 10%), there might be a good buying opportunity. But now is not the time.”