Markets are bracing for turbulence following the United States’ airstrikes on Iranian nuclear facilities, with investors expecting a spike in oil prices and increased demand for safe-haven assets.
The attack, ordered by U.S. President Donald Trump, marks a sharp escalation in Middle East tensions and could significantly affect inflation, consumer sentiment, and global market stability.
Despite mounting concerns, early trading in Middle East stock markets on Sunday showed limited alarm, with indexes in Qatar, Saudi Arabia, and Kuwait mostly flat or slightly higher.
Trump Declares Strike a “Military Success”
In a televised address, Trump called the strikes a “spectacular military success” and claimed that Iran’s critical nuclear enrichment infrastructure had been “completely and totally obliterated.”
He warned that the U.S. would pursue additional targets if Iran did not agree to peace terms.
Iran responded with strong rhetoric, warning of “everlasting consequences” and vowing to retaliate before considering any diplomatic overtures.
Market Reaction Expected When Trading Resumes
Analysts expect major stock markets to respond with a selloff once trading resumes, accompanied by increased demand for the U.S. dollar and other traditional safe havens.
“I think the markets are going to be initially alarmed, and I think oil will open higher,” said Mark Spindel, CIO of Potomac River Capital.
He noted that despite Trump’s claims, the full extent of damage remains unknown, which is likely to sustain investor unease.
Cryptocurrency Prices Reflect Jittery Sentiment
Cryptocurrency markets are already reacting.
Ether, the second-largest crypto by market cap, fell 8.5% on Sunday.
Since Israeli strikes began on June 13, Ether has dropped by 13%, indicating broader risk aversion among retail investors.
Oil Price Concerns Drive Inflation Fears
The primary concern is how Iran might retaliate.
Analysts believe Iran could target U.S. interests in the Gulf region or attempt to disrupt oil shipping lanes through the Strait of Hormuz, a vital route for crude exports from countries like Saudi Arabia, Kuwait, and the UAE.
Saul Kavonic of MST Marquee suggested this could push Brent crude prices toward the $100 per barrel mark if Iran follows through on previous threats.
Since June 10, Brent has climbed 18%, reaching $79.04 per barrel by Thursday, its highest level in nearly five months.
Possible Paths to Peace or Prolonged Conflict
Some investors are hopeful that the dramatic show of force could actually lead Iran toward negotiating a peace deal.
“With this demonstration of force and total annihilation of its nuclear capabilities, they’ve lost all of their leverage,” said Jamie Cox of Harris Financial Group.
He believes Iran might “hit the escape button to a peace deal” to avoid further escalation.
However, others warn that prolonged conflict could destabilize already fragile economies and prolong inflation pressures fueled by high energy prices and existing trade tariffs.
Historical Parallels Offer Mixed Market Outlook
Past geopolitical events offer mixed signals.
Data from Wedbush Securities shows the S&P 500 typically dips 0.3% in the three weeks after conflict erupts, but rebounds by an average of 2.3% over the next two months.
Previous crises like the Iraq War in 2003 and the 2019 attacks on Saudi oil facilities followed this pattern.
Whether markets will recover similarly this time depends heavily on Iran’s next move.