US–Iran Tensions

In light of current geopolitical tensions, conflict could impact oil supply, oil entering the global market, and increase prices. According to Reuters, on Friday, 27th February, Brent crude oil traded around USD 73 a barrel, an increase of five times this year. On a global level, the impact will largely depend on the conflict’s effect on the oil market.

Iran holds about 12% of the world’s oil reserves. Additionally, it currently exports between 1.5 million and 2 million barrels per day, primarily to China. Iran is the third-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC). It extracts about 3.3 million barrels per day (bpd) of crude oil and another 1.3 million bpd of condensate and other liquids.

Past Pressures on Oil

In terms of the Strait of Hormuz, the simple threat of disruption is often enough to cause an increase in prices.  

According to Reuters, during current events, some oil majors and top trading houses suspended crude oil and fuel shipments via the Strait of Hormuz.  An economist at Capital Economics predicts that even if the conflict is contained, Brent might rise up to around USD 80, which was the peak during the 12-day war in Iran last June. Moreover, a prolonged conflict may result in oil prices surging to around USD 100 while potentially adding 0,6-0.7% to global inflation.

Additionally, an AMP chief economist spoke to the Australian Broadcasting Corporation, indicating that oil prices could spike to USD 100 given the disruption to oil supplies including via the Strait of Hormuz. He indicates that this is clear given the nature of the conflict including talk of regime change in Iran. 

The strait is critical to global energy shipments as 20% of global oil and 20% of liquefied natural gas (LNG) flow through it. On a daily basis, 20 million barrels of crude, condensate, and fuels flow via the waterway. 

Pressures on Markets

It is expected that conflict is likely to exacerbate volatility across global markets. This includes possible impact on currency markets including the dollar index. For instance, while short-lived, the dollar index fell by around 1% during the conflict in June 2025.

In current circumstances, analysts point that the size of the fall will depend on how large and long lasting the conflict will be.

Additionally, trading bourses in the Middle East including in Saudi Arabia and Qatar col;d be impacted with possible repercussions on investor sentiment. There could also be an impact on global airline stocks due to cancelled flights across the Middle East. Their stocks could be under pressure if the conflict spreads and forces more airspace closures.

In times of conflict, investors often head toward safe havens. Thus, investment movement could go towards gold again which has had multiple record highs one after the other. So far, in 2026, gold prices have increased 22%. Meanwhile, silver is another safe haven investors could head towards causing another surge in the precious metal’s already boisterous year.

Additionally, these tensions have raised concerns about the safety of merchant vessels in and around the Arabian/Persian Gulf. These concerns could result in shipping being impacted. 

Additionally, these tensions have raised concerns about the safety of merchant vessels in and around the Arabian/Persian Gulf. According to Lloyd’s List, several carriers are being rerouted due to heightened risks and port standstills. Several container shopping carriers have reversed or diverted from Hormuz, thus rerouting vessels away from the Suez Canal.

It is being reported that in some cases insurers are cancelling policies for shipping operation in waters around the conflict.  According to the Financial Times, many war risk insurers submitted cancellation notices on Saturday 28th February, for policies covering ships moving through the key oil chokepoint. Additionally, insurance prices for ships travelling through the gulf are rising by more than half. Furthermore, it is expected that after cancelling policies, insurers will negotiate coverage at higher prices.