By Reshma Kapadia
President Donald Trump said he has given Iran a deadline to negotiate a nuclear deal, putting investors on watch for U.S. attacks that could spark a conflict threatening markets from oil to technology stocks.
In recent weeks, Trump has threatened to intervene militarily after Iran's regime killed thousands of protesters. U.S. forces, including an aircraft carrier and its accompanying warships, have been moving into the region as the president pushes for an agreement resolving concern that Tehran will gain access to nuclear weapons.
Uncertainty over whether the U.S. will strike -- Trump told a press conference Friday that only Iran knows the deadline he has given -- and how Tehran might retaliate is a worry for investors. But for now, many strategists expect de-escalation as Gulf leaders step up diplomatic efforts to avoid a conflict.
"There has been a shift in the U.S. position, away from threatening regime change and support for the protesters to using the military pressure to get diplomacy done," says Vali Nasr, a senior advisor to the Center for Strategic and International Studies and Middle East expert.
"Gulf countries are very influential in driving this point to Trump -- that it's going to be messy and not a Venezuela-like scenario," Nasr added, referring to the quick capture of Venezuelan leader Nicolás Maduro earlier in the year.
An attack on Iran could quickly escalate into a conflict that damages the global economy and evolves into a major war. Fighting that raises questions about who is in charge of Iran's oil fields or takes production offline could send oil prices past $80 a barrel, a complication for the Federal Reserve as it weighs cutting interest rates, says David Bianco, chief investment officer for the Americas at DWS Asset Management.
An Iranian effort to block shipments of oil from the Persian Gulf through the Strait of Hormuz to the Indian Ocean could send prices higher as well.
Max Layton, Citi's global head of commodities research, said there are 70% odds that the U.S. will seek to avoid provoking a powerful response from Iran. The U.S. is sensitive to higher energy prices because consumers are already fed up the cost of living, Trump may prefer to avoid a war, and domestic pressure in Iran could lay the groundwork for a deal, he said in a note to clients on Friday.
Another reason strategists see greater odds of a de-escalation is that the Middle East has a lot at stake beyond the price of oil. Saudi Arabia and other Gulf countries are trying to diversify their economies into other sectors, including technology.
A war would ruin the business climate, hitting airlines, tourism, and plans to build data centers in partnerships with U.S. technology companies. It could jeopardize foreign direct investments in data centers and artificial intelligence as investors question the idea that Saudi Arabia and others offer a secure place for such long-term investments, Nasr says.
So far, the stock market reaction has been tepid. The iShares MSCI Saudi Arabia exchange-traded fund closed down almost unchanged at $39.86, and the iShares MSCI UAE ETF lost 0.8% to $20.49.
The oil market is different. Prices were at a four-month high as traders weighed the risk of a U.S. attack, seizures of oil tankers, and the possibility that Iran could close the Strait of Hormuz.
Write to Reshma Kapadia at reshma.kapadia@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 30, 2026 16:27 ET (21:27 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments