Iran Escalation Sends Oil Higher and Global Markets Lower

Renewed US-Iran military clashes around the Strait of Hormuz triggered a broad risk-off move across global markets, with Brent crude rising nearly 4% toward $79 a barrel. The escalation revived concern that disruption to one of the world’s most important energy corridors could tighten oil supplies and reignite inflationary pressure.

Asian equities weakened sharply, led by a steep decline in South Korea’s Kospi, while US equity futures and European markets pointed lower. Treasury yields rose across the curve, particularly at the short end, as investors increased expectations that higher energy costs could delay monetary easing or prompt additional Federal Reserve tightening. The dollar strengthened, while gold, silver, bitcoin and other risk-sensitive assets declined.

Market attention now turns to US inflation data, Federal Reserve communication and the opening of corporate earnings season. The immediate outlook remains highly sensitive to shipping conditions in the Gulf: a sustained interruption would increase the likelihood of higher energy prices, tighter financial conditions and weaker global growth, while restored maritime traffic could quickly reverse part of the initial shock.