Following confirmation of large-scale U.S. military operations in Iran, analysts expect sharp oil price increases due to potential disruption of the Strait of Hormuz, alongside a global risk-off move. Markets may see equities fall 1–2% or more, U.S. Treasury yields decline 5–10 basis points, and safe-haven assets like the U.S. dollar, Japanese yen, and gold strengthen. The scale and duration of the conflict will determine whether volatility is temporary or structural.

Global markets are preparing for elevated volatility after the United States confirmed the start of “large-scale military operations” in Iran. The announcement raised concerns about broader regional escalation and its implications for energy flows, risk assets, and safe-haven demand.

U.S. President Donald Trump stated that American forces had initiated large-scale combat operations. According to Reuters, citing an unnamed Iranian official, several ministries in southern Tehran were targeted.
Investors now assess whether the situation remains contained or evolves into a prolonged regional conflict with systemic market consequences.

Why This Is Considered More Serious Than Venezuela

Florian Weidinger, CIO at Santa Lucia Asset Management, stated that the implications are “certainly more serious than in Venezuela.”
The comparison reflects structural differences.

Venezuela’s oil production currently averages around 800,000 barrels per day, far below its 1990s peak of approximately 3.5 million barrels per day. Its heavy, high-sulfur crude is relevant primarily to specialized refineries, particularly in the United States.
Iran’s relevance, by contrast, is not only about production. It is about geography.
As Kenneth Goh of UOB Kay Hian noted, “Venezuela is a production story. Iran is a chokepoint story.”

The Strait of Hormuz, located between Oman and Iran in the Persian Gulf, is one of the world’s most strategic oil transit corridors. According to Kpler data, approximately 13 million barrels of crude oil passed through the strait daily in 2025, representing roughly 31% of global seaborne crude flows.

Any disruption would have immediate global pricing implications.
In June 2025, when Israel struck Iranian nuclear facilities, equities initially fell sharply but later recovered once it became clear that Hormuz traffic remained uninterrupted.
Market participants are now watching whether that pattern repeats — or breaks.

Several analysts anticipate a classic risk-off configuration at the start of trading:
Oil prices potentially rising 5–10% or more.
Global equities opening 1–2% lower, with downside skew in high-beta and cyclical sectors.
U.S. Treasury yields falling 5–10 basis points.
Strengthening of the U.S. dollar and Japanese yen.
Increased demand for gold.

Alicia García-Herrero of Natixis expects a volatile and unfavorable market open, cautioning investors against overreacting before assessing Iran’s response.
Her warning: do not “bet on the hero.” The duration and scope of retaliation remain decisive variables.

Energy markets are the immediate transmission channel.
If supply risk intensifies or shipping insurance costs rise, crude could spike sharply. However, if operations remain targeted and short-lived, gains may retrace quickly.

David Roche of Quantum Strategy frames the scenario around duration. A short, localized campaign could produce temporary volatility. A prolonged 3–5 week regime-change process would likely generate sustained risk aversion and higher embedded geopolitical premiums in asset prices.
The distinction is critical. Markets can digest contained shocks. They reprice structural instability.

Asian markets may be disproportionately sensitive. Investment strategists note the region’s dependence on stable energy imports and uninterrupted trade routes.
Billy Leung of Global X ETFs expects global equities to open lower with elevated volatility, particularly in sectors with high beta and cyclical exposure.
Energy import dependence amplifies vulnerability to supply chain disruptions and price shocks.

Are Markets Already Partially Positioned?

Some asset managers argue that risk reduction has been building for weeks. Elevated oil prices and increased demand for U.S. Treasuries suggest partial crisis positioning was underway before confirmation of operations.
This pre-positioning may cushion the initial impact.
However, escalation scenarios — especially involving direct interference with Hormuz traffic — would likely override prior positioning.

The core question is not whether markets will react. They will.
The key question is persistence.

If operations remain short and geographically contained, the reaction may mirror prior geopolitical flare-ups: sharp but temporary.
If the conflict expands or oil transit is impaired, consequences could exceed recent geopolitical episodes, including Venezuela-related disruptions.
As Weidinger stated, the systemic implications are broader because the risk is not confined to production capacity but to a global transit bottleneck.

Markets are entering the week with elevated geopolitical risk and asymmetric downside exposure.
Oil is the primary transmission channel. Safe-haven assets are secondary. Equities face near-term pressure.

The magnitude of impact depends on three variables:
Duration of military operations.
Whether the Strait of Hormuz remains open.
The scale and timing of Iran’s response.
In modern markets, geopolitics transmits through energy, liquidity, and confidence simultaneously.
Investors are not reacting to headlines alone. They are pricing the probability of structural disruption.

By Jake Sullivan  
March 02, 2026

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