The rapid escalation of the US-Iran conflict sparks concerns. Which markets benefit, and which are dragged down? Read to understand.

Cailian Press, March 1 (Editor: Huang Junzhi) Investors are closely watching the potential market impact of the weekend attack on Iran. Among them, the oil market and energy supply face particularly notable threats.

The Islamic Republic of Iran produces about 3.3 million barrels of crude oil per day, accounting for 3% of global output, making it the fourth-largest oil producer in OPEC. However, due to its strategic geographic location, the country’s influence on global energy supply far exceeds its production volume. Iran is located on one side of the Strait of Hormuz, through which about one-fifth of the world’s oil is transported, mainly from key suppliers like Saudi Arabia and Iraq.

According to real-time data from the International Tanker Tracking System, ships around the Strait of Hormuz are generally moving at zero speed, indicating that shipping in the area has come to a halt. Additionally, media tracking shows that although the strait remains open, some oil tankers are rerouting, causing congestion at the strait’s entrances.

Triggering Oil Market Turmoil

The oil market is closed for the weekend, so there is no immediate trading data. However, Barclays analysts wrote on Saturday: “The oil market may have to face the worst-case scenario on Monday.

Based on current conditions, we believe Brent crude could reach $100 per barrel. The potential impact on the oil market cannot be overstated.”

The bank stated that 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 oil prices have steadily recovered by 2026. The benchmark Brent crude oil price has already risen 20% 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 on 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.

On the other hand, rapid increases in energy prices could also raise inflation expectations, potentially 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 inflation 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 pose a significant adverse impact on the economy, with recession risks “rising sharply.” After last summer’s attack on Iran’s nuclear facilities, Goldman Sachs said that if Iran were to blockade the Strait of Hormuz long-term, the worst-case scenario would see Brent crude soaring to $110 per barrel.

Defense and Energy Stocks May Rise

Based on experience, conflicts threatening oil supply often lead to short-term gains in energy producers’ stocks and also 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 “raring to go” again this month amid escalating tensions between the U.S. and Iran.

Meanwhile, the iShares S&P Global Energy ETF has steadily increased by 24% this year, driven by market concerns over how various conflicts could impact global supply.

Impact on Assets

Over the past year, geopolitical conflicts have been one of the factors driving gold prices above $5,000 per ounce, and confrontation with Iran could become a new catalyst for further gold price increases. At the same time, market risk aversion has generally risen, which could push up U.S. Treasury prices and lower yields.

Although investors may see stock markets decline as they digest the news, long-term negative reactions are not inevitable. Geopolitical events often have fleeting effects on stocks; even if armed conflicts continue, markets may rebound.

“If the S&P 500 energy sector rallies in the morning on Monday and then fades in the afternoon, we wouldn’t be surprised. Likewise, if the S&P 500 drops in the morning and then rebounds, we wouldn’t be surprised,” said Ed Yardeni, founder of Yardeni Research and veteran Wall Street analyst, on Saturday.

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

“A war lasting more than a few days—and one that catches investors off guard when it erupts—should trigger more pronounced negative reactions. We advise against buying stocks during declines—risk-reward does not look attractive,” the analysts wrote. “If the stock market pulls back significantly (for example, the S&P 500 drops more than 10%), it might present a good buying opportunity. But now is not the time.”