A plume of smoke rises following a reported explosion in Tehran on February 28, 2026. (Photo by AFP via Getty Images)
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Market watchers are bracing for turbulence after the U.S. confirmed it has launched “major combat operations” in Iran, a move investors say could carry far greater market consequences than the recent run of geopolitical flare-ups.
U.S. President Donald Trump said the U.S. military has begun “major combat operations” in Iran.
Several ministries in the southern part of the Iranian capital, Tehran, were targeted, Reuters quoted an unidentified Iranian official as saying.
Markets have been unfazed and accustomed to absorbing recent geopolitical and economic shocks and headlines, including Trump’s announcement of a hike in U.S. tariffs on all imports to 15%, as well as the administration’s capture of former Venezuelan President Nicolás Maduro.
“This has definitely bigger ramifications than Venezuela,” said Florian Weidinger, co-chief investment officer at Santa Lucia Asset Management.
“Venezuela was … only really relevant for people who care about that particular heavy crude,” Weidinger told CNBC. The country’s heavy, sour crude can be challenging to extract, though it is prized by specific, complex refineries, particularly in the U.S.
“That’s why it’s a bigger risk. You would expect oil to tick up a bit more violently next week as a result of that,” he added.
Oil to shoot up, pivot to safety
Venezuela currently produces an average of 800,000 barrels of crude oil per day, well below its peak of 3.5 million barrels per day, or bpd, in the 1990s.
“Venezuela was a production story. [Iran] is a chokepoint story,” said Kenneth Goh, director of private wealth management at UOB Kay Hian in Singapore.
Located in the gulf between Oman and Iran, the strait is recognized as one of the world’s most important oil choke points. About 13 million barrels per day of crude oil transited the Strait of Hormuz in 2025, accounting for roughly 31% of global seaborne crude flows, according to data from market intelligence firm Kpler.
In June 2025, when Israel struck Iranian nuclear sites, equities sold off sharply at the open, then recovered once it became clear the strait was not disrupted.
“That is the pattern markets will reference on Monday,” Goh said, adding that there could be a flight to safety with a strengthening of the U.S. dollar, Japanese yen, and a rush into gold.
Other market watchers echoed the same. Alicia García-Herrero, chief economist for Asia-Pacific at Natixis, similarly expects a “rough and risk-off” open on Monday, with global equities potentially down 1% to 2% or more, U.S. Treasury yields falling 5 to 10 basis points, and oil jumping 5% to 10%.
But “no hero bets,” she said, cautioning that investors should wait for Iran’s response.
Short campaign vs. ‘regime change endeavor’
That said, some money managers said that risk-off positioning has been building for weeks, potentially providing some buffer against initial volatility once trading gets underway.
Weidinger noted that some cross-asset moves have already reflected “a little bit of a crisis environment,” citing firmer oil and stronger demand for Treasurys in recent weeks.
While the markets have anticipated this development, investors are closely monitoring whether the latest move by the U.S. remains a short, concentrated campaign or escalates into a prolonged regional conflict.
Quantum Strategy’s David Roche framed the market impact in terms of duration and whether Iran would attempt to close the Strait of Hormuz. If the conflict is short and contained, he said, the risk-off move and oil spike could be brief.
If it turns into a longer, three-to-five-week “regime change endeavor,” markets would react “rather badly” as investors price in a wider conflict and longer oil disruption.
A prolonged retaliation by Iran would also be particularly impactful for Asian markets, given their reliance on stable energy supplies and trade routes, said Global X ETFs’ investment strategist Billy Leung, who expects global equities to open lower with heightened volatility, especially in high-beta and cyclical sectors.
