Smoke rises after a reported explosion in Tehran on February 28, 2026 (Photo by AFP, Getty Images)
– | AFP | Getty Images
Market watchers are bracing for turmoil after confirmation that the United States has launched a “large-scale combat operation” in Iran, but investors say the move could have a far greater impact on markets than recent geopolitical flare-ups.
US President Donald Trump said the US military had launched a “large scale combat operation” in Iran.
Reuters, citing anonymous Iranian officials, said several ministries south of the Iranian capital, Tehran, were targeted.
The market remains unperturbed, accustomed to absorbing recent geopolitical and economic shocks and headlines, such as President Trump’s announcement that he would raise tariffs on all U.S. imports to 15% and his administration’s detention of former Venezuelan President Nicolas Maduro.
“This is definitely having a bigger impact than Venezuela,” said Florian Weidinger, co-chief investment officer at Santa Lucia Asset Management.
“Venezuela…was only really meaningful to people with an interest in certain heavy crude oils,” Weidinger told CNBC. The country’s heavy, sour crude oil can be difficult to extract, but is especially prized by certain complex refineries in the United States.
“That’s why there’s a lot of risk. As a result, we would expect oil prices to rise a little more violently next week,” he added.
Fire oil and focus on safety
Venezuela’s crude oil production currently averages 800,000 barrels per day, well below its peak of 3.5 million barrels per day (bpd) in the 1990s.
“Venezuela was a production story.[Iran]is a challenge story,” said Kenneth Goh, director of private wealth management at UOB Kay Hian in Singapore.
This strait, located in the Gulf between Oman and Iran, is recognized as one of the world’s most important oil chokepoints. In 2025, about 13 million barrels of crude oil per day passed through the Strait of Hormuz, accounting for about 31% of global offshore oil flows, according to data from market intelligence firm Kpler.
After Israel attacked Iran’s nuclear facilities in June 2025, stock prices plummeted, but recovered once it became clear that the Straits were not in turmoil.
“This is the pattern the market will see on Monday,” Goh said, adding that a rise in the dollar and Japanese yen and a rush to gold could lead to a flight to safety.
Other market participants expressed similar opinions. Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis, similarly predicted Monday’s trading would be “rough and risk-off,” with global stocks potentially falling more than 1-2%, U.S. Treasury yields falling 5-10 basis points and oil rising 5-10%.
But “no one bets on heroes,” she said, warning investors to wait for Iran’s response.
Short-term campaigns vs. “government change efforts”
Still, some money managers said risk-off positions have been built in recent weeks and could provide some cushion against early volatility once trading begins.
Weidinger said movements among some assets already reflect “a bit of a crisis environment,” citing solid oil prices and strong demand for U.S. Treasuries in recent weeks.
Although markets had expected this development, investors are closely monitoring whether the U.S. move will amount to a short-term, focused campaign or erupt into a long-term regional conflict.
David Roche of Quantum Strategy analyzed the impact on the market in terms of duration and whether Iran attempts to close the Strait of Hormuz. He said the risk-off movement and soaring oil prices could be short-lived if the conflict is brought under control in the short term.
Investors are pricing in an escalation of the conflict and a prolonged oil turmoil, and if it becomes a “regime change effort” lasting three to five weeks, the market will react “very badly.”
Billy Leong, investment strategist at Global
