Investors are bracing for a spike in oil prices and a knee-jerk rush to safety as global markets prepare to react to U.S. air strikes on Iran’s nuclear facilities. While early trading in the Middle East remained surprisingly calm, the overriding sentiment is one of deep uncertainty over what comes next.
After President Donald Trump announced the attacks were a “spectacular military success,” investors anticipated an initial market selloff and a flight to safe-haven assets, such as the dollar. The key question now is how Iran will respond to its warning of “everlasting consequences.”
“I think the markets are going to be initially alarmed, and I think oil will open higher,” said Mark Spindel, chief investment officer at Potomac River Capital. “The uncertainty is going to blanket the markets… It’s going to raise uncertainty and volatility, particularly in oil.”
The primary concern for global markets is the impact on oil and inflation. Analysts warn that if Iran retaliates by targeting oil infrastructure or disrupting shipping through the vital Strait of Hormuz, we could be “on a path towards $100 oil.”
However, some analysts see a different outcome, suggesting the decisive strikes might have destroyed Iran’s leverage and could push Tehran toward a peace deal, which would ultimately stabilize prices.
While a sustained oil price spike could damage an already strained global economy, history suggests any market pullback could be short-lived. Past geopolitical crises in the Middle East have often seen stocks dip initially before recovering and trading higher in the following months.
