Markets Rattled as US-Israel Strikes on Iran Trigger Oil Surge and Safe-Haven Rush

What Happened

Global financial markets were jolted on Monday as investors digested the weekend launch of "Operation Epic Fury" — a series of coordinated military strikes by the United States and Israel against targets in Iran. The escalation, which reportedly resulted in the death of Supreme Leader Ayatollah Ali Khamenei and other senior officials, sent shockwaves through every major asset class and raised fears of a prolonged conflict with far-reaching economic consequences.

US equity futures tumbled sharply before the open, with the S&P 500 E-minis falling 75.75 points (-1.1%), Dow E-minis dropping 572 points (-1.17%), and Nasdaq 100 E-minis sliding 364.5 points (-1.46%). Although markets recovered from their worst levels by the close, the session ended firmly in the red.

Closing Levels

Index	Close	Change
S&P 500	6,838.74	-40.14 (-0.58%)
Dow Jones	48,622.24	-355.68 (-0.73%)
Nasdaq Composite	22,528.79	-139.42 (-0.61%)
TSX Composite	34,343.73	+3.74 (+0.01%)
STOXX 600	—	-1.38%

The pan-European STOXX 600 fell 1.38% in trading, with Germany's DAX dropping 1.67%, France's CAC 40 declining 1.54%, and Britain's FTSE 100 shedding 0.76%.

Oil Prices Surge on Strait of Hormuz Fears

The most dramatic moves came in energy markets. Brent crude surged over 8.6% to $79.14 per barrel, having touched an intraday high of $82.37 — a fresh 52-week high. US West Texas Intermediate jumped 7.7% to $72.17.

The primary concern driving the oil spike is the potential disruption of traffic through the Strait of Hormuz, the narrow waterway through which approximately 13–15 million barrels per day — roughly 20% of global oil supply — transits. Any sustained closure or disruption would represent one of the most significant supply shocks in decades.

Barclays warned that Brent could reach $100 per barrel if the security situation continues to spiral. JP Morgan estimated oil could climb to the $100–$120 range if the conflict extends beyond three weeks and triggers production shutdowns. Amrita Sen, founder of Energy Aspects, told CNBC she expects prices to hold around the $80 level for the near term.

Safe Havens Rally, Volatility Spikes

Investors rushed into traditional safe-haven assets. Gold futures surged 2.87% to $5,398.70 per ounce, briefly piercing the $5,400 level intraday to touch $5,418.50 — underscoring the depth of risk aversion across markets.

The CBOE Volatility Index (VIX) — Wall Street's fear gauge — jumped 16.3% to 23.09, reaching a three-month high. The US dollar edged higher by approximately 0.3%, while Bitcoin fell modestly to $66,253 and Ethereum dropped 1.8% to $1,950.

Sector Winners and Losers

The market divide was stark. Defense and energy stocks surged, while travel, airline, and consumer-facing sectors bore the brunt of the sell-off.

Outperformers:

Stock	Change
AeroVironment (AVAV)	+10%+
Lockheed Martin (LMT)	+2.6%
Kratos Defense (KTOS)	+9%
RTX Corp (RTX)	+2.5%
Northrop Grumman (NOC)	+5%
Occidental Petroleum (OXY)	+3.2%
Exxon Mobil (XOM)	+2.7%

Underperformers:

Stock	Change
United Airlines (UAL)	-6%+
American Airlines (AAL)	-5%+
Delta Air Lines (DAL)	-5%+
Marriott International (MAR)	-5%
S&P 500 Financials	-1%

Analyst Perspective

Goldman Sachs noted that cyclical sectors and oil-importing economies will likely face continued pressure unless a resolution materialises quickly, though they assess that severe growth consequences would require sustained disruption to trade flows.

David Rosenberg cautioned investors against overreacting, stating that past geopolitical conflicts have typically triggered market reactions that quickly reversed. However, the scale of this escalation — involving direct strikes on Iranian leadership — makes historical comparisons more difficult.

What to Watch

The trajectory of this conflict is now the dominant variable for global markets. Key factors to monitor in the days ahead include any Iranian retaliation targeting oil infrastructure or shipping lanes, developments around Strait of Hormuz transit, central bank commentary on inflation implications from the oil shock, and the response from OPEC+ members to potential supply gaps. With oil threatening to break above $80 and volatility elevated, risk management takes centre stage. Markets showed some resilience by recovering from their worst intraday levels, but the uncertainty premium is unlikely to fade until the geopolitical picture becomes clearer.