The ongoing U.S.-Israeli military campaign against Iran, launched on February 28, 2026, has entered its third week, resulting in significant geopolitical and economic turmoil [1][4][5]. President Donald Trump has declared that the U.S. is 'totally destroying' Iran militarily and economically, claiming that Iran's navy and air force have been decimated and warning of further developments [1][5]. The White House has outlined the objectives of 'Operation Epic Fury' as destroying Iran's ballistic missile capabilities, navy, and support for proxies, and ensuring Iran cannot acquire nuclear weapons [4].
The conflict has led to the effective closure of the Strait of Hormuz, a critical oil shipping route, with Iran's new Supreme Leader Mojtaba Khamenei vowing to keep it blocked [5][6][7]. This has caused a severe disruption in global energy supplies, with Brent crude oil prices holding above $100 per barrel and up more than 9% for the week, following a 27.9% surge the previous week—the largest since 2020 [5][7]. West Texas Intermediate (WTI) crude also remains elevated, and the International Energy Agency has released a record 400 million barrels from emergency reserves to stabilize markets [5][7]. The U.S. Energy Department announced the release of 172 million barrels from the Strategic Petroleum Reserve [1][7].
In response to the energy crisis, President Trump temporarily lifted sanctions on Russian oil, allowing countries to buy Russian oil already at sea until April 11, a move described as a 'narrowly tailored, short-term measure' by Treasury Secretary Scott Bessent [3][7]. While the U.S. claims this will not provide significant financial benefit to Russia, European officials expressed dismay, fearing it could strengthen the Kremlin as attention shifts from Ukraine to the Middle East [3]. Russia welcomed the waiver and called for further easing of restrictions [3].
The market reaction has been severe: global equities have slipped, with European stocks down and the Stoxx 600 Banks index falling 1% [3][7]. Deutsche Bank shares dropped 0.85% amid broader banking sector losses [7]. Asian markets also declined, and U.S. stock futures edged lower [3][7]. Analysts warn that a prolonged closure of the Strait of Hormuz could lead to a global economic shock and stagflationary pressures, with Barclays noting growing investor nervousness and Nomura raising India's inflation forecast due to rising energy costs [5][6]. India, heavily reliant on the Strait for oil and LPG imports, faces panic-buying and supply constraints, with the government prioritizing household LPG and allowing alternative fuels for businesses [6].
Forward-looking statements from market participants and officials highlight ongoing uncertainty. President Trump has signaled no imminent end to the conflict, while Iran's leadership vows continued resistance [5]. Barclays and Nomura warn of inflationary risks and potential stagflation if disruptions persist [5][6]. The U.S. plans to begin military escorts for vessels through the Strait of Hormuz 'as soon as militarily possible,' though no timeline has been set [7]. Russia, meanwhile, questions the U.S. exit strategy and reiterates its strategic partnership with Iran [4].
CONCLUSION
The U.S.-Iran war has triggered a global energy crisis, sending oil prices above $100 and rattling financial markets worldwide. Emergency measures, including the release of strategic reserves and a temporary waiver on Russian oil sanctions, have so far failed to calm markets. With no clear end to the conflict in sight and critical shipping lanes blocked, inflationary pressures and economic uncertainty are expected to persist.