Washington (TDI): Investors are bracing for turbulence after the United States launched “major combat operations” in Iran, raising fears of a wider regional conflict and potential disruption to global markets.
President Donald Trump announced that the US military has begun extensive operations targeting several ministries in southern Tehran.
While markets have grown accustomed to absorbing geopolitical shocks, including tariff hikes and the US capture of former Venezuelan President Nicolás Maduro, experts warn that the current situation carries far broader implications.
“This has definitely bigger ramifications than Venezuela,” said Florian Weidinger, co-chief investment officer at Santa Lucia Asset Management. Unlike Venezuela, whose oil output primarily affects heavy crude markets, Iran sits atop a critical chokepoint.
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Located between Oman and Iran, the Strait of Hormuz handles roughly 13 million barrels of crude per day, about 31% of global seaborne flows. Experts say any disruption here would be far more consequential than the Venezuela situation, which involves limited production.
Analysts expect oil prices to rise sharply as fears mount over potential disruption to shipping through the strait. A flight to safe-haven assets such as the US dollar, Japanese yen, and gold is also anticipated. Alicia García-Herrero, chief Asia-Pacific economist at Natixis, predicts global equities could open down 1% to 2%, US Treasury yields could fall 5–10 basis points, and oil could surge 5% to 10%, though she cautions against “hero bets” until Iran’s response is clear, according to CNBC.
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Some investors note that risk-off positioning has been building for weeks, which could dampen initial market shocks. Market reactions will hinge on whether the US campaign remains short and contained or escalates into a prolonged regional conflict.
Asian markets could be particularly vulnerable, given the region’s dependence on stable energy flows.
