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What is the impact of the US-Israel joint strike on Iran on the financial markets? How can we avoid having our wallets blown up?
The US and Israel are no longer pretending; they have officially launched a comprehensive joint military operation against Iran. The missiles weren’t very accurate, and while I was taking a nap in the afternoon, my account was already blown to bits... Now, Little Wealth God is here to talk about how this conflict affects the financial markets and how we should operate.
💣 First, let’s look at the latest developments in the US-Iran conflict based on the timeline:
February 27
The US government officially approved the evacuation of non-emergency personnel from the US mission in Israel and issued emergency guidance urging them to leave as soon as possible. US Ambassador to Israel, Tom Nides, even issued a stern warning: “If you need to leave, do so today.”
February 27
The Chinese Ministry of Foreign Affairs and Chinese embassies in Iran remind Chinese citizens to refrain from traveling to Iran for the time being.
February 27
Trump stated he was “dissatisfied” with the progress of Iran nuclear negotiations. “We don’t want to fight, but sometimes we have to.”
February 28 14:18
An explosion occurs in downtown Tehran, Iran’s capital.
February 28 14:20
Israel announces a “preemptive” strike against Iran.
February 28 14:39
An attack near the office of Iran’s Supreme Leader.
February 28 14:39
Security officials say the attack on Iran was the result of joint US-Israel action.
February 28 14:50
US officials: Airstrikes on Iran are ongoing.
Three hours ago
Israel is preparing for the first phase of a four-day joint strike.
Three hours ago
Explosions are heard in two western provinces of Iran.
Two hours ago
US officials: US and Israel are conducting a joint military operation against Iran.
Two hours ago
Iranian officials say they are preparing for “destructive” retaliation.
Two hours ago
Seven missiles hit near the Iranian presidential palace and Khamenei’s residence.
Two hours ago
Israel announces its operation against Iran is called “Roaring Lion.”
One hour ago
Israel orders civilians to immediately enter shelters.
One hour ago
Multiple Iranian missiles attack Tel Aviv, Israel.
One hour ago
Trump says he will take over the Iranian government after the war ends.
One hour ago
Iran is hit by a third round of missile attacks.
51 minutes ago
The commander-in-chief of the Iranian army has died.
27 minutes ago
The US Navy base in Bahrain is attacked.
Summary: From the progression of the conflict, it’s clear that the US and Israel are determined and well-prepared to strike Iran. In plain terms, they’ve long decided not to negotiate and are ready to fight. Iran has not backed down either, retaliating fully against Israel. The conflict is showing signs of evolving into war, and Trump’s statement about waiting for the war to end before replacing the Iranian government indicates the US’s goal to completely destroy the Iranian regime. There’s even a high likelihood of ground troops being involved later. The conflict won’t end soon and could worsen further. Therefore, it’s currently a risk-avoidance phase, not the time to be bottom-fishing or making big moves.
👉 Next, the possible directions of the conflict’s development:
To understand how this conflict might impact the financial markets, we need to analyze several potential scenarios:
1. Full-scale regional war (50% probability): The US-Israel coalition aims to overthrow the Iranian regime, launching a full-scale attack. Iran activates proxy forces like Hezbollah in Lebanon and Houthi rebels in Yemen, spreading the war to neighboring countries.
2. US-Israel quick strike ending the war (40% probability): They target Iran’s leadership with precision strikes, quickly overthrow the regime through decapitation, and take control of the government, installing a new proxy government.
3. Short-term limited strikes (10% probability): After targeting key objectives, the US and Israel pull back, Iran restrains its retaliation, and international mediators broker a ceasefire.
📈 Summary of US-Iran war impact on financial markets:
1. Crude Oil Market: Short-term surge, long-term trend depends on conflict intensity
The Strait of Hormuz, controlled by Iran, is a vital chokepoint for about 30% of global oil shipments. News of the US-Israel joint attack caused a panic-driven surge in oil prices. As of 15:00 on February 28, Brent crude futures in London broke $95 per barrel, up over 4%; WTI futures in New York rose over 3.8%; Shanghai crude futures surged over 4.2%.
Looking ahead, if the conflict remains limited and short-term, with the US and Israel pulling back after hitting core targets and Iran restraining retaliation, oil prices could rise by 10%-30%, with Brent potentially reaching $85-$100 per barrel. If the conflict escalates, with Iran retaliating by attacking oil tankers or disrupting shipping, prices could quickly jump to $90-$105 per barrel and fluctuate at high levels for 1-3 months. If Iran blocks the Strait of Hormuz, prices could spike 40%-60% within 24 hours, surpassing $120 per barrel, possibly reaching over $150 in the short term. However, the market has buffers: the US Strategic Petroleum Reserve holds about 415 million barrels, which can be released within 13 days at a maximum rate of 4.4 million barrels per day; OPEC+ has idle capacity, with Saudi Arabia and other producers considering an emergency increase of 137,000 barrels per day in April; and US shale oil is elastic—high prices will incentivize US shale producers to ramp up production, increasing daily output from 13.4 million to over 14 million barrels.
2. Gold and Silver Markets:
Gold, with its dual role as a geopolitical risk hedge and inflation hedge, will likely see a surge of capital inflows. Historical experience shows that Middle East conflicts often push precious metal prices higher. During the escalation of the Iran conflict in June 2025, gold prices briefly broke $2,300 per ounce. This event again confirms the safe-haven value of precious metals amid geopolitical risks. Since the market is closed for gold trading over the weekend, prices are expected to open higher on Monday.
3. Stock Markets:
War typically causes risk assets to plummet. Since global stock markets are closed for the weekend, they are expected to react negatively upon opening Monday. Investors, worried about escalating geopolitical risks and a slowdown in global economic recovery, will likely sell risk assets. Sectors like airlines, tourism, consumer discretionary, and technology growth stocks will lead declines, while defensive sectors, energy, and defense stocks may outperform.
4. Forex Market:
(1) US Dollar: Short-term strength, medium-term pressure
In the short term, safe-haven capital flows into the dollar, pushing the US Dollar Index higher. As the world’s primary reserve currency, the dollar often benefits from rising geopolitical risks. However, in the medium term, high oil prices will boost global inflation, forcing the Federal Reserve into a policy dilemma: inflation may require maintaining high interest rates or resuming rate hikes, but high rates will increase fiscal pressure and weaken the dollar’s attractiveness. Additionally, the US fiscal deficit could negatively impact the dollar’s outlook.
(2) Euro/Pound: Significant weakening
Europe relies heavily on Middle Eastern energy; soaring oil prices will exacerbate import-driven inflation, slow economic growth, and increase pressure on the European Central Bank to cut rates, leading to euro and pound depreciation. Europe’s economic recovery is already fragile, and rising energy costs due to geopolitical conflicts further dampen prospects. Investor confidence in the euro and pound declines, causing their exchange rates to weaken.
5. Cryptocurrency Market:
Recent divergence between gold and Bitcoin has already demonstrated the collapse of the “digital gold” narrative. We should view Bitcoin as a risk asset that will be heavily impacted by war. In fact, Bitcoin has already fallen sharply, dropping below $63,000, with over 150,000 liquidations across the network. Currently, Bitcoin hovers around $64,000, with major players observing the conflict’s further development to decide the next move.
📊 Our most important response strategy:
We need to closely monitor the conflict’s evolution over the next few days to determine our operational tactics.
1. If it escalates into a full regional war:
a. Gold and Silver Markets—Perpetual Contract Arbitrage
Go long on perpetual contracts. Since the weekend’s traditional financial markets are closed, you can first operate on XAUT and XAG perpetual contracts, buying dips to set long positions, and aim to profit when markets open on Monday.
b. Forex and Oil Markets—Traditional Finance (TradFi) Long Positions
Currently, Iran has not yet blocked the Strait of Hormuz. If the war continues to intensify, oil and dollar prices will keep rising. You can go long in TradFi.
c. Bitcoin Market—Short contracts, buy spot near previous lows
If the conflict worsens, prices may challenge previous lows around $59,900. You can short via contracts. For long-term holders, every dip is an opportunity to buy the dip; don’t worry about where the price will bottom out—buy spot around $59,900.
2. If the war ends with a quick strike or ceasefire through international mediation:
a. Gold and Silver—Short positions
b. Forex and Oil—Short positions
c. Cryptocurrency—Long positions, with a stop-loss around $59,900.
💡 Position Management: In extreme events like war, markets often behave unpredictably and deviate from technical analysis. Under such circumstances, our primary concern should be protecting our wallets. Every war is a painful process of the old order collapsing and a new balance forming. Being able to survive in a country far from war is already fortunate. Don’t expect to make every penny all the time. “A cannon roar, gold flows in” is a privilege of the capital giants. In this global capital “Monopoly” game, as retail investors, surviving is more important than winning once.