War Fears Roil Global Markets
The U.S.-Iran war is rattling global markets, with the Dow plunging 1,100 points in early trading as investors price in a prolonged conflict. Oil prices have spiked to multi-year highs, and the conflict's disruption to air travel has caused an 18x spike in travel insurance inquiries.
The current conflict is the culmination of months of escalating tensions, including a 12-day war in June 2025 and failed diplomatic talks in Geneva as recently as last week. The coordinated U.S.-Israeli military operation, which began on February 28, 2026, aims to destroy Iran's missile and military capabilities and prevent it from obtaining nuclear weapons. In the opening days, strikes targeted leadership and military sites in Tehran and other major cities, reportedly killing Iran's Supreme Leader, Ayatollah Ali Khamenei. Iran has retaliated with missile and drone attacks on Israel and U.S. military bases across the Gulf region, including in the UAE, Qatar, Kuwait, and Bahrain. This has led to the effective closure of the Strait of Hormuz, a critical chokepoint for global trade. Through this narrow waterway passes about 20% of the world's oil consumption and a fifth of its liquefied natural gas (LNG). The shutdown of the Strait of Hormuz has sent shockwaves through global supply chains, halting the movement of nearly 170 container ships and impacting everything from just-in-time semiconductor deliveries to construction materials for major projects in the region. Air cargo has also been severely disrupted, with airspace closures leading to an 18% drop in global capacity and a 400% spike in freight costs in just 48 hours. The market reaction has been severe beyond the initial plunge of the Dow. In Asia, Japan's Nikkei has fallen 3.1% and South Korea's Kospi has plunged 7.2%. In Europe, the FTSE 100 is on track for its worst day in 11 months with a 2.6% drop. The price of Brent crude oil surged to over $82 a barrel, and safe-haven assets like gold have reached record highs, trading at over $5,400 an ounce. This is not the first direct military confrontation between the powers. In June 2025, a 12-day war began after Israel launched surprise attacks on Iranian nuclear and military facilities. That conflict also saw retaliatory Iranian missile strikes and a U.S. bombing of three Iranian nuclear sites before a ceasefire was brokered. U.S. President Donald Trump has stated the current military campaign could last four to five weeks, with the objectives of destroying Iran's missile capabilities, annihilating its navy, and ensuring the regime cannot fund "terrorist armies." However, some analysts are skeptical that the operation can achieve its goal of regime change through air power alone and warn of the potential for a prolonged and destabilizing regional conflict.
