Strike on Iran Markets Brace for Shock

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•  28 Feb 2026
 

•   WTI  
   
  0.00%

Markets are positioning for a tense open on Monday after the United States and Israel launched significant airstrikes in Iran, followed by Iranian missile retaliation against Israel and additional targets in the region. President Donald Trump announced a major military operation targeting strategic facilities and senior leadership. Iran responded with missile attacks on U.S. bases in the Persian Gulf.

This is not merely a geopolitical headline. It is a direct event risk to global energy flows.

The central variable is the Strait of Hormuz. Roughly 20 million barrels per day of crude oil and petroleum liquids about 20% of global consumption transit this narrow corridor between Iran and Oman. At its narrowest point, the passage is just 21 miles wide. Any disruption creates an immediate supply shock.

This differs fundamentally from production-driven crises such as Venezuela, where output has fallen to roughly 800,000 barrels per day. That is a supply impairment. Hormuz is a transit chokepoint impacting the entire Gulf export complex.

Analysts at Goldman Sachs estimate oil could gap 5%-10% at the open if disruption risk escalates. JPMorgan Chase points to materially larger upside in a prolonged closure scenario. Expect $WTI and $BRK.B energy-linked exposure to respond accordingly, alongside integrated majors and tanker equities.

Historical pattern recognition matters. In June 2025, following strikes on nuclear facilities, crude initially spiked 7% at the open but retraced within hours once it became clear the Strait remained open. If this confrontation remains calibrated and contained, markets may replay that template: gap higher, then mean reversion.

However, a sustained escalation would alter the regime. A prolonged supply shock implies higher global inflation prints, deferred rate-cut expectations, and renewed pressure across duration-sensitive equities. In that environment, cyclicals—airlines, transport, industrials—face downside beta, while defense contractors and upstream energy names exhibit relative strength.

Interestingly, June’s episode did not produce classic risk-off behavior. Instead, equity markets priced forward to a "day-after" scenario neutralization of nuclear capability and potential regime destabilization. In that framework, geopolitical resolution risk was treated as structurally bullish.

This introduces a divergence: war uncertainty typically widens risk premia, yet markets may rally if investors believe the outcome reduces long-term strategic overhang. Should optimism build around regime change and sanctions removal, Iran could re-emerge as a major oil exporter. Incremental supply would pressure crude structurally lower over time, reversing the initial spike.

In the near term, defensive flows are likely. The U.S. dollar and gold should see increased demand; $DXY proxies and $GLD may benefit. U.S. Treasury yields could drift lower on safe-haven allocation, supporting $TLT.

Importantly, markets have partially pre-priced this event. Escalation risk has circulated for two months, and positioning reflects that probability distribution. The magnitude of reaction will depend less on the strike itself and more on confirmation bias around Hormuz continuity.

The open will be volatile. The decisive variable is not the strike but whether oil keeps moving through the Strait.

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