Oil prices spiked and equities tumbled on March 2, 2026, after US–Israel strikes on Iran sent shockwaves through global financial markets. Investors fled risk assets, driving a surge in crude and gold, while stock indices across Asia, Europe, and the United States slid sharply. Though some losses moderated by mid-session—hinting at hopes of a contained conflict—the volatility underscored how fragile global markets remain in the face of geopolitical shocks.
Equity Sell-Off: Risk Aversion Takes Hold
US futures for the S&P 500 and Dow Jones Industrial Average opened down more than 1%, before trimming losses to around -0.8% by mid-Bangkok trading. The declines compounded existing concerns over stretched AI-driven valuations and tightening credit conditions, now amplified by war risks.
Asian markets led the retreat. Japan’s Nikkei 225 fell 2% intraday before closing down 1.5% at 57,981. Hong Kong’s Hang Seng slid 1.6% to 26,215, while Thailand’s SET index dropped 2.1%. Australia’s ASX dipped 0.3%, Taiwan lost 0.6%, and Singapore fell 1.9%. Shanghai remained flat, reflecting cautious domestic positioning. European futures also declined, while South Korea’s markets were shut for a holiday.
Sectoral moves were telling: airlines and oil services companies sank on fears of fuel cost spikes and route disruptions. Conversely, defense stocks such as BAE Systems gained around 3%, and oil majors like BP and Shell rose 1–2%, reflecting expectations of higher crude revenues.
Commodity Rally: Oil and Gold Soar
Brent crude surged 7–10%, peaking near $85 per barrel before easing slightly. The rally was driven by fears over the Strait of Hormuz, through which roughly 20% of global oil supply flows. Tanker hesitancy and insurance premiums spiked, injecting a fresh “war premium” of $4–10 per barrel into prices.
Gold, the ultimate safe haven, climbed 2.4% to $5,371 per ounce, with some analysts forecasting a further $200 surge if hostilities intensify. Silver followed suit. Meanwhile, the US dollar edged higher against the euro on haven demand, and 10-year US Treasury yields hovered near 11-month lows, signaling a flight to safety but muted recession panic.
Oil Price Forecasts: How High Could It Go?
Analysts are sharply divided on the coming weeks.
Short-Term (1–4 Weeks):
Brent and WTI initially jumped 10% in over-the-counter trading to around $80 and $75, reopening Monday near $85 and $78. ICIS analyst Ajay Parmar warns prices could exceed $100 if the Strait of Hormuz is blocked. RBC’s Helima Croft and Rabobank echo the $100+ risk, while Rystad Energy projects Brent could briefly hit $92. The current war premium could double if escalation intensifies, especially given Iran’s 3.3 million barrels per day output.
Medium-Term (1–3 Months):
JPMorgan maintains a 2026 baseline Brent average near $60 but says disruption could add $10–20, pushing late-year prices toward $91. A Reuters poll of 34 analysts pegs Brent at $63.85 for 2026, modestly higher than January forecasts. However, economists assign a 40% “high-risk” probability—covering Hormuz blockades or US ground operations—that could catapult oil to $150, triggering a global recession.
OPEC+ spare capacity of about 5 million barrels per day offers a buffer, potentially capping panic unless physical supply is directly choked.
Global Market Implications
The conflict arrives at a delicate juncture. US equities are flat year-to-date, even as other global markets outperformed. With S&P valuations near 25 times earnings, oil shocks could compress multiples and complicate Federal Reserve policy, potentially forcing a pause in rate decisions.
India faces particular strain: crude at $90 could inflate the monthly import bill by ₹20,000 crore, weaken the rupee toward 80 per dollar, and add 1–2% to inflation. Analysts warn the Sensex and Nifty could correct 5–10% if volatility persists. Globally, investors now price a 20% recession risk tied to sustained supply disruptions.
Indian Markets Reel as Tensions Trigger Sharp Sell-Off
Indian equities tumbled sharply on March 2 amid geopolitical tensions and rising oil prices, triggering broad-based selling. The Sensex plunged 2,743 points (3.4%) at open to 78,543—erasing nearly ₹6 lakh crore in market value—before trimming losses to trade around 80,226, down 1.3%. The Nifty50 fell 519 points (2.06%) to 24,659, slipping below the 25,000 mark intraday. Foreign Portfolio Investors sold ₹7,536 crore on Friday, while the rupee weakened to 79.5 against the dollar. Oil-sensitive stocks were hit hardest: IndiGo dropped 5%, L&T and Adani Ports fell 3–4%, and BPCL and IOC declined 2–3%. Defence stock BEL gained 1%, and pharma stocks showed relative resilience. Mid- and small-caps slid about 2%, with most sectoral indices in the red. Analysts caution against panic selling but expect volatility to persist amid Hormuz-related risks.
Volatility With a Timeline
President Trump’s suggestion that strikes may last “four weeks or less” has tempered extreme forecasts, but markets remain hostage to developments in the Strait of Hormuz and Iran’s next moves. For now, oil above $90 appears a plausible baseline in a protracted standoff, while gold retains upside momentum. Whether this shock becomes a sustained economic headwind—or a sharp but fleeting spike—will hinge on de-escalation efforts and the durability of global supply buffers. In a tightly interconnected financial system, even localized conflict can ripple worldwide with extraordinary speed.
(With agency inputs)
