Moneycontrol Pro Market Outlook | Missiles and market mayhem

Iran–Israel–US conflict jolts markets,

Dear Reader,

The Middle East has once again become the axis around which global markets spin. The joint American and Israeli military strikes on Iran, followed swiftly by Tehran's retaliatory missile attacks across the Gulf, have delivered the kind of shock to energy markets that the world has not witnessed in decades. What began as a military confrontation has rapidly transformed into an economic emergency, with consequences rippling outward from the Strait of Hormuz to the trading floors of world markets.

An event like the Iran-Israel-US war, which threatens to engulf the Middle East, upends all technical charts, data points, and fundamental assumptions. This week, we depart from our conventional format for the weekly outlook.

At the heart of this crisis lies oil. Brent crude, which had been trading at around $67 to $70 a barrel before the strikes, has already climbed sharply, and analysts are warning that prices could breach $100 if the conflict persists and supply routes remain compromised. The Strait of Hormuz, that narrow strip of water separating Iran from Oman, is the single most consequential chokepoint in global energy. Nearly 20 million barrels of crude oil, condensates and refined petroleum products pass through it every single day. That figure represents roughly 20 to 26 percent of the global oil supply. Iran's Revolutionary Guards have broadcast warnings over VHF channels that no ship is permitted to pass.

Several major oil trading houses and tanker owners responded immediately by suspending shipments through the strait. Satellite imagery confirmed the consequence, with vessels piling up near ports like Fujairah in the United Arab Emirates, anchored and waiting. Tanker freight rates, which had already been climbing steadily as tensions escalated, are now set to rise dramatically. Benchmark rates for very large crude carriers sailing from the Middle East to China have more than tripled since the start of the year. For every day that marine transit remains interrupted, the world is denied an estimated 20 million barrels of crude exports.

Beyond crude oil, the conflict has introduced serious vulnerabilities in the liquefied natural gas market. Qatar, the world's second-largest LNG exporter, sits directly within the conflict zone and is being intercepted by missiles aimed at the country. Every single LNG cargo that Qatar exports must transit the Strait of Hormuz, and there is no viable alternative route. This single dependency accounts for approximately 20 percent of global LNG shipping. A sustained closure or disruption of the strait would create panic among Asian buyers for flexible American cargoes, placing them in direct competition with European buyers in an already tight spot market. The absence of spare LNG capacity anywhere in the world means that any supply shock here would not be temporary in its price effects.

Liquefied petroleum gas poses yet another concern. Iran is a significant LPG supplier to China, offering Beijing an important alternative to American exports. Any disruption to Iranian LPG flows would force China to seek replacement supplies from other producers, creating cascading demand pressures across global LPG markets.

The threat to oil infrastructure extends beyond the strait itself. Explosions were reported near Iran's Kharg Island, the terminal through which roughly 90 percent of Iranian crude exports normally flow. Iran had reportedly transferred much of the oil stored there onto tankers in the days preceding the strikes, suggesting some anticipation of the attack, but the terminal's vulnerability remains a critical concern.

Analysts are already predicting a grim picture for the energy market, with Goldman Sachs estimating that losing 1 million barrels a day of Iranian exports for a sustained period would add roughly $8 to oil prices. Rystad Energy goes further, estimating that a wider conflict could push prices up by $10 to $15 per barrel, while analysts at Tortoise Capital place the Hormuz disruption scenario well above $100.

For financial markets beyond energy, the conflict has accelerated a flight to safety that was already underway. Gold, which had already gained 22 percent in 2026, is expected to climb further as investors seek refuge from uncertainty. Silver, trading above $93 an ounce, is being watched closely for a potential run toward the psychologically significant $100 level. The Swiss franc has strengthened, while United States Treasury yields have fallen amid rising bond demand. Bitcoin, once fashioned as a digital haven, has shed more than a quarter of its value in two months and fallen further on the news.

Equity markets have reacted with predictable anxiety. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq all registered losses in the days leading up to and immediately following the strikes. Defence stocks are expected to find buyers, while airlines face a double blow from suspended routes and rising jet fuel costs.

Crack spreads, which measure the difference between refined product prices and crude, tend to amplify crude price movements, meaning that jet fuel and diesel price increases could overshoot the rise in raw oil itself.

For India, the stakes are particularly acute. The country imports over 85 percent of its crude oil requirement, and Middle Eastern suppliers account for more than half of those imports. A sustained move above $80 per barrel would widen India's current account deficit, push domestic inflation higher and put pressure on the rupee.

The Nifty 50, which had already fallen more than one and a half percent in the week before the strikes, faces the prospect of a gap-down opening on Monday. Oil marketing companies, aviation firms, paint manufacturers, automobile companies, and logistics providers all face margin headwinds. Indian basmati rice exports to Iran, worth over a billion dollars annually, have effectively halted. Tea exports face similar uncertainty.

Markets will stabilise eventually. They always do. But the speed of that stabilisation will depend entirely on whether the guns fall silent before the oil stops flowing.

Cheers,

Shishir Asthana