US-Israel Iran Strikes Ignite Hormuz Risk As Oil Jumps

Operation Epic Fury Opens A New US-Israel Campaign In Iran

The United States and Israel launched coordinated air and missile attacks on Iran on February 28, 2026, opening a direct conflict that immediately rippled into commodities, rates, and equities. The Pentagon named the operation Operation Epic Fury, and Washington said the opening phase aimed to degrade Iran’s missile forces and nuclear-related infrastructure while pressuring the leadership in Tehran, a set of objectives that can ignite a broad repricing when supply routes and policy paths are suddenly in doubt.

Diplomacy Breaks Down After Geneva Talks On Feb. 26

The attack came after nuclear talks in Geneva on February 26 failed to secure a breakthrough, even as intermediaries signaled limited progress. That timing matters for markets because it reduces near-term confidence in a negotiated off-ramp and raises the probability that sanctions, shipping constraints, and energy disruptions persist into March. Iran has long denied seeking a nuclear weapon, but the U.S. and Israel framed the strike decision as pre-empting future capability, putting political risk back into the forward curve.

Strikes Hit Command Nodes, Missile Forces, And Nuclear Sites

The opening strikes used a mix of cruise missiles and aircraft, alongside low-cost one-way drones deployed in combat for the first time by U.S. forces. Israel said the attacks targeted military and security sites and claimed Iran’s Supreme Leader, Ayatollah Ali Khamenei, was killed, while Iranian authorities initially did not confirm his fate. For investors, leadership uncertainty is a mechanism that can widen credit spreads quickly, because it raises the odds of abrupt policy moves, capital controls, or disruptions to payment flows tied to the energy trade.

Iran Retaliates With Missiles Across Israel And Gulf Bases

Within hours on February 28, Iran launched missile salvos toward Israel and fired at Gulf cities hosting U.S. forces, with Kuwait, Qatar, the United Arab Emirates, and Bahrain reporting interceptions and Jordan also taking down missiles. UAE state media reported one person killed in Abu Dhabi, and Bahrain said a U.S. Fifth Fleet service facility was struck. The breadth of targets matters because it increases the chance of airspace closures and insurance restrictions, pushing volatility surges beyond a single front.

Hormuz Disruption Turns Naval Risk Into A Supply Shock

Iran said it would continue attacks until it defeated its enemies, and the market focus shifted to the Strait of Hormuz, the corridor that connects the Gulf to the Arabian Sea. Shipping data showed more than 200 vessels, including oil and liquefied gas tankers, dropping anchor outside the strait as operators reassessed transit risk, and three tankers were damaged in Gulf waters with one seafarer reported killed on March 1. Even partial delays can lift freight and war-risk premia fast, tightening effective supply without a single refinery being taken offline.

Oil Jumps As Brent Spikes Above $82 And Gasoline Flares

Energy prices responded first. Brent crude surged as much as 13% to $82.37 a barrel, the highest since January 2025, before trading near $79.78 in early March 2 dealing, while U.S. West Texas Intermediate moved above $75 intraday and later held near $72.90. In U.S. fuel markets, analysts warned average retail gasoline could move above $3 a gallon for the first time in more than three months, and gasoline futures briefly hit $2.496 a gallon, lifting inflation expectations into the spring driving season.

Rates, FX, And Credit Reprice Through Inflation And Funding Costs

Higher crude and freight costs push headline inflation higher, which can keep short-dated yields supported as central banks weigh whether to delay easing. The typical risk-off pattern supports the dollar and pressures import-heavy emerging currencies, while equity dispersion widens between energy and defense winners and travel, chemicals, and consumer cyclicals that face margin compression. In credit, lower-rated transport and industrial issuers can see spreads gap wider if insurers reduce coverage or if refinancing windows tighten, as investors demand compensation for event risk.

Policy Levers Include OPEC+ Output And Strategic Stock Releases

Policymakers and producers have limited levers to offset a chokepoint disruption. OPEC+ agreed to increase output by 206,000 barrels per day from April, but RBC Capital Markets’ Helima Croft said many producers are “essentially producing at capacity,” leaving spare barrels concentrated in a small set of exporters. Governments can also release strategic stocks, and the International Energy Agency has maintained contact with major producers, but emergency barrels cannot solve a multi-week shipping halt if tanker movement remains constrained.

Tredu Scenarios For Markets From March Through April

Base case: tanker traffic continues under higher insurance costs and the conflict stays contained, allowing oil to consolidate in an $80–$90 range while equities rotate toward cash-generative energy and defensives; Citi said its baseline assumes leadership changes could “stop the war within 1–2 weeks.” Upside scenario: a sustained interruption to Hormuz transit pushes Brent toward $100, lifting breakevens and volatility as airlines and high-beta tech reprice; trigger is a measurable fall in Gulf loadings and persistent anchoring beyond 7 days. Downside scenario: a ceasefire framework restores flights and shipping quickly, compressing the risk premium; trigger is a verifiable reopening of routes and fewer missile launches over 48 hours.