Six Months of Conflict Between USA, Israel, and Iran Impact Global Markets

A war involving the United States, Israel, and Iran has reached the six month mark this Friday, August 28. The conflict began on February 28, 2026, when the United States and Israel launched attacks against Iran that killed leader Ali Khamenei and several commanders. The war has since expanded to involve 16 countries and has significantly altered the geopolitical map of the Middle East. Military actions have included the involvement of Hezbollah and Houthi rebels, as well as strikes on nuclear facilities in Natanz and Dimona and energy infrastructure in the Gulf and Qatar. Despite various attempts at diplomacy, including the Memorandum of Islamabad signed on June 17, the region remains unstable with ongoing naval blockades and intermittent attacks.

The conflict has caused severe disruptions to global energy and food markets. Restrictions on the Strait of Hormuz, a critical trade route, pushed Brent crude oil prices above 120 dollars per barrel in April. These disruptions, combined with Ukrainian attacks on Russian refineries, increased the cost of diesel and aviation fuel. Additionally, the reduction in fertilizer shipments through the Strait of Hormuz, coupled with El Niño and the war in Ukraine, pushed global food prices to their highest level in over three years by July.

Global financial markets have shown mixed reactions. While energy and food prices rose, global stock markets continued to advance, driven largely by investments in artificial intelligence. The MSCI world index reached a record 105 trillion dollars this month. Traditional safe haven assets performed inconsistently: the dollar rose by approximately 1.4 percent, while US government bonds lost about 3.5 percent. Gold prices fluctuated, dropping nearly 25 percent early in the war before rising more than 15 percent in August.