Iran-US War: Stock Market Impacts Through History, Oil Shocks, and Gold
- Ankur Kapur
- 6 days ago
- 3 min read
My original plan was to discuss the disruptions caused by AI, but the events of the past weekend have shifted the world's focus. Following the strikes on Iran by US and Israeli forces on February 28, 2026, we have entered a period of profound turmoil.
Just days into this open conflict—marked by Iranian missile retaliations and reports of the death of Supreme Leader Ali Khamenei—investors are navigating a landscape of surging oil prices, gold rallies, and highly volatile equities.
A Shift in the Global Order
This scenario echoes past Middle Eastern flashpoints, such as the 1990 Gulf War, where initial panic eventually gave way to market relief. However, today’s risks feel amplified. Between Iran’s regional proxies, its nuclear ambitions, and its strategic control over the Strait of Hormuz, the stakes are higher.
The post-WWII era, defined by a general respect for sovereignty and international agreements, appears to have ended. While the COVID-19 pandemic marked the beginning of this shift, current events are deepening the cracks in the global order. We must prepare for a future defined by more frequent systemic shocks.
The Munger Philosophy: Substance Over Noise
In times of chaos, it is helpful to recall the wisdom of the late Charlie Munger:
“Over the long term, it's hard for a stock to earn a much better return than the business which underlies it earns. If the business earns six percent on capital over forty years and you hold it for that forty years, you're not going to make much different than a six percent return—even if you originally buy it at a huge discount. Conversely, if a business earns eighteen percent on capital over twenty or thirty years, even if you pay an expensive looking price, you'll end up with one hell of a result.”
While the new world order will undoubtedly trigger stock market shocks, the long-term performance of equities will remain tethered to the underlying health of the businesses themselves.
Historical Precedents: Lessons from the Gulf
Financial markets have historically weathered Iran-related crises without permanent structural damage, often treating war as a short-term volatility event.
The 1990 Gulf War: This remains the "gold standard" for comparison. Iraq’s invasion of Kuwait removed 4.5 million barrels per day (bpd) from the market almost instantly. Brent crude skyrocketed from $17 to over $40 (a 140% surge). Consequently, the S&P 500 plunged 18%, and the Dow shed 15% by October of that year.
The Iran-Iraq War (1980–1988): During the "Tanker War" phase, over 500 vessels were attacked, disrupting 20% of global oil flows. While oil prices doubled following the 1979 Revolution, they eventually crashed to $10 by 1986 due to non-OPEC supply gluts. US stocks endured recessions in the early 80s but recovered once energy costs stabilised.
The Pattern: Stocks typically dip 5% to 18% during the initial uncertainty, bottoming out near the peak of oil prices, and rallying once de-escalation begins—provided the supply chain remains intact. Today, we have stronger buffers, including US shale production (13 million bpd) and production flexibility from other major global players.
Gold as the Ultimate "Fear Gauge"
Gold thrives when fiat currencies and geopolitical stability falter.
Current Surge: Gold exploded from a pre-tension price of $5,000 to over $5,500 per ounce in late February.
Silver: Following gold's lead, silver rose 1.7% to $95/oz.
While prices have slightly pared back since the onset of open war, the trend is clear.
Monitoring central bank buying and selling is the simplest way to gauge where these commodities are headed. Given the current uncertainty, there is no clear ceiling on how high these prices could go.
Current Market Outlook
Interestingly, global markets have not yet delivered a "knee-jerk" crash. This suggests the market may have been pricing in this tension for days, or perhaps investors view this as a decisive—albeit violent—path toward resolving the broader Israel-Hamas-Iran conflict.
My view remains cautious: regional disturbances will likely persist. Without a clear "supreme leader" in the region, the internal race for dominance in the Middle East will continue to fuel uncertainty. For now, the stock market will remain a slave to the flow of information.
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