Rising tensions in Iran are sending shockwaves through energy and financial markets, pressuring global flows, inflation expectations, and market sentiment, according to research from four sources. The Iran war has formally begun with US and Israeli operations targeting every layer of Iranian state power simultaneously: political leadership in Tehran, nuclear facilities across multiple provinces, missile production and air defence systems, IRGC infrastructure, ports, oil assets, airports, and military bases. These strikes were designed to degrade political authority, military capability, nuclear development, and economic infrastructure in one coordinated move, according to the same research.
Supreme Leader Ali Khamenei was killed, alongside the Defence Minister, senior IRGC commanders, and nuclear officials, according to research from four sources. The likely outcome, according to intelligence assessments, is a consolidation of power by IRGC hardliners and the appointment of a new Supreme Leader, potentially within days.
Iran’s retaliation widened the battlefield with missile and drone strikes targeting Israel in multiple waves, also extending to Bahrain, Qatar, the UAE, Kuwait, Jordan, Iraq, Saudi Arabia, Syria, and US bases across the region, according to research from four sources. Gulf states, initially seeking neutrality, are now granting airspace access, intelligence cooperation, and logistical support to Washington, according to the same research.
Iran announced the closure of the Strait of Hormuz, through which roughly 20 million barrels of oil per day and 15% of global LNG transit. War-risk insurance premiums have surged and shipping costs are rising due to the Strait of Hormuz closure, according to research from four sources. Disruption from the Strait of Hormuz closure would disproportionately impact major importers such as China, India, Japan, and the EU, while also threatening Gulf exporters whose energy flows depend on the strait, the research indicates.
The market's full focus is on President Donald Trump and how the Iran war is going ahead of the quarterly reports for the first quarter of the year.
Iran’s primary objective is regime survival, and Tehran appears to assume that US domestic support for a prolonged conflict is limited and that President Trump faces a narrow political window with significant operational risks, according to research from four sources. Iranian leadership likely expects an initial wave of US/Israeli strikes followed by renewed negotiations, the same research suggests. The US objective of eliminating key leadership and degrading missile capabilities suggests an attempt to reshape negotiating dynamics rather than pursue full-scale occupation. From a game-theory perspective, Iran holds three strategic levers: time, the Strait of Hormuz, and avoiding fully saturated missile attacks to prevent escalation while prolonging the conflict, according to the research.
Any meaningful disruption to the Strait of Hormuz could push oil above $100, triggering global inflationary pressure, according to research from four sources. The 2026 Iran war, including the closure of the Strait of Hormuz, has led to what the International Energy Agency has characterized as the largest supply disruption in the history of the global oil market. The impact of the conflict echoes the 1970s energy crisis through acute supply shortages, currency volatility, inflation and heightened risks of stagflation and recession, the research indicates.
Interest rate reductions were expected to be postponed or conversely increased in light of higher inflation caused by supply shortages and speculation, according to research from four sources. Stock markets experienced declines globally and there was a global bonds market sell-off.
Arab states of the Persian Gulf as well as Iran itself rely on the Strait of Hormuz for their energy exports and grocery imports, with only Saudi Arabia and UAE having alternative, albeit limited, routes, according to research from four sources. The war has caused a systemic collapse of the Gulf Cooperation Council economic model. Following the closure of the Strait of Hormuz on 4 March 2026, oil and LNG exports were stranded, causing Brent Crude to surge past $120 per barrel and forcing QatarEnergy to declare force majeure on all exports. The oil production of Kuwait, Iraq, Saudi Arabia, and the United Arab Emirates collectively dropped by a reported 6.7 million barrels per day by 10 March, and by at least 10 million barrels per day as of 12 March, according to the research.
The market is only looking at that (Trump and the Iran war). That's the only thing right now.
The maritime blockade triggered a concurrent grocery supply emergency across Gulf Cooperation Council states, which rely on the Strait for over 80% of their caloric intake; by mid-March, 70% of the region's food imports were disrupted, forcing retailers like Lulu Retail to airlift staples, resulting in a 40–120% spike in consumer prices, according to research from four sources. The crisis has shifted from a fiscal contraction toward fears about a humanitarian crisis following Iranian strikes on desalination plants—the source of 99% of drinking water in Kuwait and Qatar.
The regional aviation sector, including Emirates and Qatar Airways, faced a near-total cessation of operations due to multi-national airspace closures, causing widespread disruption to global air travel, according to research from four sources.
Beyond immediate trade disruptions, analysts have noted a profound shift in the region's long-term economic narrative. Deutsche Welle reported that the Gulf states are unlikely to sustain high levels of investment spending during or after the war. The conflict has been described as the end of the narrative that the Gulf is a permanently safe destination for expatriates, immigrants, and tourists; the Qatar-funded Middle East Council on Global Affairs suggested the war has irreversibly shaken the region's image, exposing a deep-seated fragility beneath the facade of the Gulf's rapid economic transformation. Sinem Cengiz, a Kuwaiti journalist, conveyed in her article how the immeasurable social and psychological impact in the economic, political and security spheres were unlikely to fade.
Conflict in the Middle East will bring word during the Q1 earnings season of insured losses focused in key lines including marine, aviation, political violence and energy, according to research from four sources. Early figures for insured losses will likely sound manageable and not heavy, but they need not be spread evenly among major names, according to a key US equity brokerage.
According to Svenska Dagbladet, Lars Söderfjell described the market's full focus being on President Donald Trump and the Iran war ahead of quarterly reports for the first quarter of the year. According to the same source, Söderfjell also described the market as being solely focused on that issue. He stated that the first quarter is generally assumed to have been a good quarter for stock market companies, with industrial companies expected to have approximately 7 percent profit growth. For the stock market as a whole, profits are expected to be at the level of the same quarter last year, despite a stronger Swedish krona, according to Söderfjell.
Key unknowns persist, including the trajectory of diplomatic efforts to de-escalate the conflict and the mobilization of an international humanitarian response to the growing crises in the Gulf.