Financial markets were jolted over the weekend as renewed conflict in the Middle East emerged as a potential "black swan" event. Investors are closely monitoring the impact of the attack on Iran.

On March 1, local time, Saudi Arabia's stock market opened with a sharp decline. The Tadawul All Share Index (TASI) plummeted, falling over 4% in early trading. At the time of writing, the index was still down nearly 2%. Bitcoin retreated to $66,791 after previously surpassing $68,000. Earlier that day, the Kuwait Stock Exchange announced a suspension of trading starting March 1, citing the evolving situation, until further notice.

Regarding oil prices, analysts at Barclays pointed out that, given the current circumstances, the oil market may face its worst-case scenario when it reopens on Monday, with Brent crude potentially reaching $100 per barrel. Other economists warned that a sustained surge in oil prices could worsen U.S. inflation, potentially eliminating any chance of a Federal Reserve interest rate cut this year.

Amid rising risk aversion, precious metals like gold are also expected to continue their upward trend. Analysis suggests that if Middle East tensions escalate further, gold could become the "ultimate safe haven" for global capital, with prices potentially challenging historical highs.

Former U.S. President Donald Trump stated, "Iran has just announced an unprecedented major attack for today. They better not do it, because if Iran does, we will hit back with a force never seen before."

According to the latest reports from Xinhua News Agency, multiple shipping and trading sources indicated that several tanker owners and traders have suspended the transport of crude oil, fuel, and liquefied natural gas through the Strait of Hormuz. The German Shipowners' Association described the shipping industry as facing an "acute operational crisis."

The escalation between the U.S. and Iran has sharply heightened tensions in the global energy market. Iran currently produces approximately 3.3 million barrels of oil per day, accounting for 3% of global output and ranking as the fourth-largest producer in OPEC.

More critically for the market, due to its strategic location, Iran's influence on global energy supply far exceeds its production volume. The country borders the Strait of Hormuz, a passage for about one-fifth of the world's crude oil, primarily from key suppliers like Saudi Arabia and Iraq.

Concerns are mounting that disruptions to oil transit through the Strait of Hormuz could intensify expectations for rising oil prices, making the global economy's inflation challenges even more severe.

Market participants warn that even without a full blockade, low-level friction such as harassment or seizure of tankers could be sufficient to drive up global shipping costs and exacerbate worries about oil supply.

Per the Xinhua report, following attacks on Iran by the U.S. and Israel, Iran announced the closure of the Strait of Hormuz shipping lane. Real-time data from international tanker traffic monitoring systems shows that the sailing speed of tankers in the surrounding waters has generally dropped to zero, indicating that shipping in the area has come to a standstill.

Barclays analysts noted in a recent report, "The oil market may have to face the worst-case scenario on Monday. Based on current developments, we believe Brent crude could reach $100 per barrel. The potential impact on the oil market cannot be overstated."

The bank suggested investors should anticipate oil prices testing the $100 per barrel level on Monday, implying a potential upside of approximately 35%. International oil prices have been steadily recovering in 2026 after last year's sharp decline. The benchmark Brent crude has risen 20% year-to-date.

Jorge Leon, Head of Geopolitical Analysis at Rystad Energy, added, "If there are no signs of de-escalation over the weekend, a risk premium could push Brent crude prices up by $10 to $20 per barrel on Monday."

On another front, rapid increases in energy prices could also push up inflation expectations, potentially pressuring business activity and consumer spending.

Deutsche Bank wrote in a recent report, "A positive supply shock in oil prices would have a significant impact on inflation expectations and inflation risks," adding that an oil price shock is a major risk to its 2026 economic outlook.

Goldman Sachs analysts had previously predicted that a serious conflict with Iran would pose a significant adverse effect on the U.S. economy, with recession risk "rising sharply." Following attacks on Iranian nuclear facilities last summer, Goldman Sachs stated that its worst-case scenario, involving a prolonged Iranian blockade of the Strait of Hormuz, projected Brent crude prices soaring to $110 per barrel.

Several economists warned that sustained high oil prices would further deteriorate U.S. inflation, potentially completely extinguishing the possibility of a Fed rate cut within the year.

As U.S.-Iran tensions have heated up, WTI crude futures have gained approximately 16% year-to-date, with prices up about $10 per barrel from the start of the year.

Brian Bethune, an economist at Boston College, told media, "The case for rate cuts is evaporating before our eyes." He noted that rising oil prices, combined with aggressive tariff policies, are creating upward pressure on inflation, making rate-cut decisions increasingly complex.

Traders in derivative markets still expect the Fed to cut rates twice this year, by 25 basis points each, with the first cut in June and the second in September. However, many analysts believe evolving geopolitical risks could make these expectations difficult to realize. Scott Anderson, Chief U.S. Economist at BMO Capital Markets, warned that if the conflict persists, the Fed's next move could even be a rate hike.

Will gold prices also surge? Geopolitical conflict has historically been a major driver for gold price spikes, and confrontation with Iran could serve as a new catalyst for further gains.

Industry insiders point out that if Iran blocks the Strait of Hormuz and U.S.-Iran conflict escalates, gold could become the "ultimate safe haven" for global capital, with prices potentially reaching new record highs.

Concurrently, a broad rise in risk-off sentiment could push up U.S. Treasury prices, thereby lowering yields.

Although stock markets might fall as investors digest the news, the impact of prolonged geopolitical events on equities is often short-lived; markets may rebound even while armed conflict continues.

Veteran Wall Street strategist Ed Yardeni, founder of Yardeni Research, said, "We would not be surprised if any early Monday rally in the S&P 500 energy sector fades by the afternoon. Similarly, we would not be surprised if any early Monday sell-off in the S&P 500 reverses into a rally."

Nevertheless, Barclays analysts cautioned investors against being overly optimistic that the latest U.S.-Iran conflict will be a controllable, short-lived event, or against buying the dip.

The analysts wrote, "A war lasting more than a few days—and one that catches investors by surprise when it starts—should trigger a more pronounced negative reaction. We advise against buying immediately on share price declines—the risk-reward does not seem attractive. If U.S. stocks correct to a certain extent, such as the S&P 500 falling more than 10%, a buying opportunity might emerge. But now is not the time."

Additionally, historically, conflicts threatening oil supplies have led to short-term gains for energy producer stocks and also boosted defense stocks.

Year-to-date, the iShares U.S. Aerospace & Defense ETF has risen 14%. The ETF saw significant gains immediately after the Venezuela incident and has been active again this month amid escalating war tensions between the U.S. and Iran.