By Matt Gertken
About the author: Matt Gertken is chief strategist of geopolitical strategy and U.S. political strategy at BCA Research.
Be sure: The U.S. and Israel are pursuing full regime change in Iran. Israel has said their joint attack Saturday killed Supreme Leader Ali Khamenei, according to The Wall Street Journal. Other Iranian leaders remain prime targets.
It's early, but the intensity of the sweeping offensive campaign suggests that the region-wide conflict will get worse before it gets better. Although the fallout for energy markets and global economies will be extensive, investors should carefully assess the likely magnitude of the conflict's impact before rushing to buy any dips. Until damage can be measured and reasonably assessed, risk aversion should prevail in financial markets.
U.S. leadership must have perceived that Iran was participating in talks in Geneva over its nuclear capabilities for the past two weeks merely to delay. Iranian negotiators failed to offer their U.S. counterparts the minimal concession that would have prevented war: a permanent and total dismantlement of its uranium enrichment. The two sides were meant to continue talks at the International Atomic Energy Agency meeting in Vienna next week, but apparently the U.S. saw no reason to hold out a few more days only to learn that Iran has no intention of making meaningful concessions.
Hence the U.S. and Israel seized what little element of surprise remained after their vast military buildup in the region over the past few weeks and struck Iran's missile and drone launch sites, its military command facilities, and its capital city, among others.
Now the fog of war has descended over the region. Initial infrastructure damage appears limited -- the U.S. hasn't yet destroyed Iran's nuclear capabilities or critical oil export terminals in the region -- but that appearance could be misleading. U.S. attacks and Iranian retaliation will likely escalate in the coming days and possibly weeks.
With the Iranian regime facing annihilation, it has nothing to lose. In fact, it now has good incentive to attack regional energy infrastructure and deliver a global economic shock. That could weaken American popular support of the war and the resolve of American leaders to prosecute the war to completion of regime change. It could also embolden global opposition to the U.S. and Israel, which will be useful to the Iranian regime, should it survive.
Investors should proceed as if regional energy supply disruptions will definitely occur, even if the physical damage initially seems limited. Iranian leadership has already signaled it will close the vital Strait of Hormuz, through which about 20% of global oil and 15% of global liquefied natural gas flow. Shipping through the Strait is already voluntarily declining. If attacks succeed in striking ships, oil wells, pipelines, or ports, then that disruption will no longer be voluntary or short-lived.
The immediate market implications should be a drop in global equities and a rally in global safe-haven assets. Gold will continue its bull run. U.S. Treasuries will especially benefit if physical oil supply disruptions imply that a nonspeculative rise in prices will curb consumer demand.
Although global equities will likely fall, U.S. stocks should outperform, if global economic growth slows because of the disruption. The rotation into European, Japanese, and Chinese stocks we have seen over the past year won't be supported if these energy import-dependent manufacturing states face negative surprises to corporate earnings and margins.
Other stock markets within the Americas will also benefit, on a relative basis, since they will benefit from locally produced oil supplies and remain far from the conflict itself.
If and when it becomes apparent that the battle damage doesn't affect energy supply, investors should buy the dip in global equities and sell the rip in oil. But not before then.
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February 28, 2026 16:01 ET (21:01 GMT)
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