Investors are preparing for significant market volatility following weekend military strikes on Iran, with the oil market emerging as the primary concern amid threats to critical energy flows. The Strait of Hormuz, a vital global shipping lane through which approximately 13 million barrels of crude oil pass daily, has become the focal point as reports indicate Iran may move to close the waterway.
According to Saturday reports, Iranian authorities appeared to be taking steps toward shutting down the strait, which carries between 20% and 30% of the world’s oil supply. This development represents a worst-case scenario that analysts warn could trigger sharp price increases when trading resumes Sunday evening.
Oil Market Faces Potential Price Surge
Barclays analysts warned that oil markets might confront their worst fears on Monday, with Brent crude potentially hitting $100 per barrel. The bank emphasized that the potential effect on oil markets is hard to overstate, given the critical nature of the threatened supply route.
Such a price level would represent a 37% spike from Friday’s closing price of $67.02. Markets had already been on edge over a potential oil shock this year following tensions with both Iran and Venezuela, contributing to Brent crude’s 20% year-to-date gain in 2026.
Additionally, a rapid rise in energy prices would likely escalate inflation expectations, potentially constraining business activity and consumer spending. Deutsche Bank noted in a recent analysis that a positive supply shock to oil prices would materially impact inflation expectations and risks.
Meanwhile, Goldman Sachs analysts characterized a serious conflict with Iran as a major economic headwind that would see recession risks climb sharply. The firm’s worst-case scenario projects Brent oil prices peaking at $110 per barrel if Iran closes the Strait of Hormuz for an extended period.
Defense and Energy Stocks Poised for Gains
Historical patterns suggest that conflicts threatening oil supplies typically trigger near-term rallies in energy producer shares while boosting defense stocks. The iShares US Aerospace & Defense ETF has already climbed 14% in 2026, surging after the Venezuela attack and again as tensions with Iran escalated.
In contrast, the iShares S&P Global Energy ETF has marched steadily higher throughout the year, rising 24% as markets have evaluated disruptions to global supplies from various conflicts. These sector-specific movements could accelerate depending on how the situation develops.
Safe Haven Assets Expected to Benefit
Geopolitical conflict has been integral to gold’s bull case over the past year amid its rally to over $5,000 an ounce, and the Iran confrontation could serve as a fresh catalyst for further gains. However, a general risk-off shift could also send Treasurys higher, pushing down yields as investors seek safety.
However, while stocks could tumble initially as investors digest the news, a prolonged negative reaction isn’t guaranteed. Market veteran Ed Yardeni noted on Saturday that he wouldn’t be surprised if any selloff in the S&P 500 on Monday morning turns into a rally by afternoon.
Nevertheless, Barclays analysts cautioned against buying any dip on Monday. Although markets barely reacted to the bombing of Iran’s nuclear facilities in 2025, the bank warned investors not to assume the conflict will be contained and short-lived.
The analysts recommended waiting before entering the market, suggesting that if equities pull back significantly—say over 10% in the S&P 500—there will likely come a time to buy, but not immediately. The coming days will prove critical as investors assess whether Iran follows through on closing the strait and how long any disruption might last.
