Market Update – January 2026
12/02/2026Market Update – Middle East War
11/03/2026
Middle East War
On 28 February 2026, Israel and the United States launched a coordinated military operation against Iran, codenamed Operation Epic Fury. The strikes targeted Iran’s leadership, nuclear program, missile sites, military facilities, and regime infrastructure. On 1 March, Iranian state media confirmed that Supreme Leader Ayatollah Ali Khamenei had been killed in the strikes, along with his daughter, son-in-law, grandson, and senior IRGC commanders.
Iran responded aggressively, launching ballistic missiles and drones at US assets and allies across the region. Targets included Israel, Saudi Arabia (Riyadh and Eastern Province), the UAE (Abu Dhabi and Dubai), Bahrain (US Fifth Fleet HQ), Kuwait (Ali al-Salem air base), Qatar (Al Udeid air base), Jordan, and Oman.
The only major implication of this conflict is on global energy markets. Iran only produces around 4% of the global oil supply, but the Iranian military can close or disrupt the Strait of Hormuz, through which around 20% of global oil and gas production is transported. Even if the Strait is not formally closed, sea traffic will be redirected away until the risk has reduced. In line with this, oil prices have spiked, rising around 10%. If the conflict is protracted, some travel and war risk premium will likely be embedded into oil prices until it is resolved. This is unlikely to have a meaningful impact on markets or the global economy.
Meanwhile, if whoever takes control of Iran after this is more friendly to the West, there is some chance that global oil prices fall as sanctions are lifted.
Markets do tend to sell first and ask questions later on geopolitical events such as this. However, they also recover quickly. This seems likely to be another of these sorts of episodes. Equity markets rose last night and the ASX was flat yesterday.
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