US & Israel Strike Iran, Roiling Global Markets
A major U.S. and Israeli military strike on Iran has sent shockwaves through global markets and sparked fears of a wider conflict. The attack puts the Strait of Hormuz, a critical chokepoint for over 20% of the world's seaborne oil, under direct threat. Global oil prices have climbed as analysts watch for further disruption to energy infrastructure and supply chains.
This latest military action follows a significant escalation in 2025, when a 12-day war saw Israel and then the U.S. conduct direct strikes on Iranian nuclear and military sites. The current operation is reportedly targeting the highest levels of Iranian leadership, with unconfirmed reports claiming the death of Supreme Leader Ayatollah Ali Khamenei. The Strait of Hormuz is not just an oil chokepoint; it's also the transit route for about 20% of the world's liquefied natural gas (LNG), primarily from major producer Qatar. In 2024, an average of 20 million barrels of oil flowed through the strait daily, with few practical alternative routes for the vast majority of that volume. Analysts forecast that even a limited conflict could push Brent crude to $80 a barrel, a peak seen during the June 2025 war. A prolonged conflict that disrupts supply could drive prices toward $100 a barrel, potentially adding 0.6 to 0.7 percentage points to global inflation. Beyond oil, broader market volatility is expected to intensify. The VIX volatility index, a key measure of market fear, had already risen by a third this year prior to the strikes. Investors are anticipated to move toward safe-haven assets, such as gold and U.S. Treasurys. The conflict is already affecting regional energy infrastructure. Israel has ordered the temporary shutdown of its largest offshore gas fields, Leviathan and Karish, as a precautionary measure. This action mirrors steps taken during the 2025 conflict, which led to a halt in Israeli gas exports to Egypt. In response to the strikes, Iran has launched retaliatory missile attacks on Israel and U.S. military facilities in several Gulf countries, including Qatar and the UAE. Iran's Revolutionary Guards have reportedly warned all vessels that the Strait of Hormuz is unsafe to navigate, effectively closing the critical waterway.
