The ongoing U.S.-Iran war has triggered widespread volatility across global financial markets, with equities, bonds, currencies, and commodities experiencing significant turbulence over the past month [1]. Equities worldwide have suffered a bruising sell-off, with all three major Wall Street averages set to end the month in negative territory. The impact has been particularly severe in energy-dependent regions; South Korea's Kospi index, which was the top-performing stock market of 2025, fell by almost 20% in March due to heightened sensitivity to energy shocks [1]. Goldman Sachs strategists noted that the 'balance of risks has worsened' for equity markets, raising the probability of a stagflationary outcome. They stated, 'Stagflation has historically been a poor environment for equities, characterised by low real performance and elevated volatility,' and warned that further equity downside and weak real returns could be expected if stagflation materializes [1].
Government bond markets have also been affected, with borrowing costs rising amid a broad sell-off of developed-market sovereign debt. Bond yields have steadily increased throughout March as investors reprice the chances of central bank rate hikes [1]. Commodities, especially energy, have surged, with the closure of the Strait of Hormuz by Iran causing global oil and gas prices to spike [2].
Russia has emerged as a major beneficiary of the energy price surge. Sergey Vakulenko of the Carnegie Russia Eurasia Center reported that the price of Russian Urals crude oil jumped by more than $60 a barrel, reaching $115 on Tuesday, up from $57 on February 27, the day before the U.S. and Israel launched their bombardment of Iran [2]. This price increase is bringing the Russian state almost $9 billion per month in additional revenue [2]. Even countries previously reducing Russian oil imports, such as India, are now buying more, and the U.S. issued a 30-day waiver in March to allow purchases of sanctioned Russian oil stranded at sea in an effort to tame global energy price hikes [2]. Russian exports of helium, aluminum, and nitrogen fertilizer have also increased state revenues, though at a much smaller scale compared to oil [2].
Despite this windfall, Russia's state budget deficit stood at around $35 billion in the first two months of the year [2]. The additional revenue has allowed President Vladimir Putin to postpone unpopular planned cuts to state spending [2]. However, analysts caution that the longevity of Russia's windfall depends on the duration of the conflict. Inflation in Russia remains high at 5.9%, with interest rates at 15%, and the central bank is struggling to control price rises driven by military spending, rising food prices, labor shortages, and sanctions [2]. Gen. (Ret.) Richard Shirreff commented that Russia's short-term benefit from the Iran war masks deeper economic challenges [2].
Market strategists and analysts advise caution amid the volatility. Dan Coatsworth of AJ Bell recommended diversification, sticking with an investment plan, and avoiding over-trading, noting that wild swings have left some investors disappointed and emphasizing the importance of a long-term view [1].
CONCLUSION
The U.S.-Iran war has led to sharp declines in global equities and increased volatility across asset classes, while surging energy prices have provided Russia with a substantial, though potentially temporary, fiscal windfall. Analysts warn of heightened stagflation risks and urge investors to remain cautious and focused on long-term strategies. The market impact remains high, with future developments dependent on the conflict's duration and broader economic pressures.