Stocks Slide Worldwide as Trump Iran Trade War Threat Escalates — Oil Nears $115

Global stock markets are sliding sharply as oil prices surge toward $115, driven by escalating tensions between Donald Trump and Iran and growing fears of a prolonged disruption to global energy supplies. What began as a geopolitical shock is now evolving into something far more dangerous: a market-wide repricing of inflation, risk, and global growth.

Asian markets bore the brunt of Monday’s opening sell-off. South Korea’s Kospi plunged more than 6%, with trading briefly suspended after futures hit circuit breakers. Japan’s Nikkei 225 fell nearly 5%. Hong Kong’s Hang Seng dropped 4% and the Shanghai Composite shed 3.7%. European markets opened 1–2% lower. On Wall Street, the S&P 500 closed its fourth consecutive losing week on Friday — its longest such streak in a year — while the Dow and Nasdaq each fell around 2% for the week. US futures pointed to further losses at Monday’s open.

Brent crude surged above $113 a barrel in early trading, with spikes toward $115, having risen more than 50% since the conflict began in late February. Goldman Sachs raised its Brent forecast to $110 a barrel for March and April, assuming Hormuz flows remain at just 5% of normal levels for a further six-week period.

What Is Driving the Sell-Off

The immediate trigger was a 48-hour ultimatum issued by President Trump on Saturday, warning that he would order the destruction of Iranian power plants unless Tehran fully reopened the Strait of Hormuz. Iran responded by threatening to target energy infrastructure and desalination facilities across the Gulf.

With around 20% of global oil flows passing through the Strait of Hormuz, even partial disruption has sent shockwaves through global markets. The strait has been effectively closed to non-Iranian vessels since early March, representing the largest supply disruption in the history of global energy markets. As explored in our analysis of the Iran war and its economic consequences, the conflict crossed a threshold this month that markets had been hoping to avoid — moving from a temporary price shock to a structural repricing of global energy risk.

Attempts to route oil around the closure have provided only partial relief. Saudi Aramco has ramped flows through its East-West Pipeline to the Red Sea port of Yanbu, but as covered in our analysis of Saudi Arabia’s critical oil pipeline network, the route can handle at most 4 million barrels per day against a Hormuz deficit of approximately 20 million — and exposes shipments to a new risk through the Houthi-controlled Bab el-Mandeb strait.

This Isn’t Just a Sell-Off — It’s a System Shock

The market reaction is being driven by three compounding forces that go well beyond the immediate geopolitical headlines.

The first is an inflation shock. Oil at $110–$115 a barrel flows through into petrol prices, transport costs, manufacturing inputs and household energy bills within weeks. The national average US petrol price has already risen more than $1 per gallon in a single month. Eurozone and UK inflation, already sticky above target, now faces a renewed upward impulse with no obvious offset.

The second is interest rate risk. Before the conflict began, traders had priced in at least two Federal Reserve rate cuts in 2026. That expectation has now evaporated. The yield on the 10-year US Treasury jumped to 4.38% by end of last week — up from 3.97% before the conflict began — as bond markets priced in a sustained period of elevated energy-driven inflation. Central banks in Europe, Japan and the UK all held rates steady at their most recent meetings, unwilling to cut into a supply shock.

The third, and most concerning, is the growth dimension. Analysts are increasingly warning of a stagflation scenario — where rising energy costs collide with slowing economic growth. Higher oil prices act as a tax on consumption, compressing corporate margins and household spending simultaneously. The IEA’s executive director Fatih Birol described the global economy as facing “a major, major threat,” warning that no country would be immune if the crisis continued in its current direction.

Oil Is the Story

Brent crude has surged above $110, with spikes toward $113–$115 as markets price in a prolonged supply disruption. The trajectory depends entirely on whether the Strait of Hormuz reopens — and there is currently no diplomatic framework in place to make that happen.

Goldman Sachs now assumes Hormuz flows remain at only 5% of normal for a further six weeks before a gradual one-month recovery — a scenario that would see Brent average $110 per barrel through April. If Iran follows through on its threat to expand attacks on Gulf energy infrastructure in retaliation for US strikes, that forecast becomes conservative.

The choking of Hormuz has also disrupted fertiliser shipments, raising concerns about global food security that extend the economic damage well beyond energy markets.

Global Impact

The energy shock is landing differently across the major economic blocs. Europe faces compounding vulnerability — the continent entered 2026 with gas storage at just 46 billion cubic metres, well below recent years, at a time when Europe is already attempting to reshape its financial independence from American-controlled infrastructure. A prolonged LNG supply disruption through Hormuz forces European buyers onto the spot market in direct competition with Asia.

Asian manufacturing economies — South Korea, Japan, Taiwan — face the double pressure of energy cost inflation and weakening export demand as global growth forecasts deteriorate. The Kospi’s 6% fall on Monday reflects that exposure acutely. For the United States, the inflationary channel is the dominant concern, with the Fed now paralysed between slowing growth and rising prices.

Where Money Is Going

Investors are increasingly rotating out of equities and into cash and defensive assets as uncertainty intensifies. The Russell 2000 index of smaller US companies — more sensitive to higher borrowing costs — led last week’s decline, falling 2.3%. Technology stocks, which benefited most from the rate-cut expectations now being unwound, are under the sharpest pressure.

Energy stocks are the notable exception. US shale producers, with minimal Gulf exposure and direct leverage to higher crude prices, have outperformed. Defence stocks continue to trade at elevated levels.

The broader credit market is also under watch. Redemption pressures that were already building in private credit before the conflict — as examined in our analysis of the liquidity squeeze hitting private credit funds — now face an additional layer of stress as the risk-off environment accelerates outflow requests.

Even as regulatory shifts continue to reshape capital flows — including the anticipated passage of the US Crypto Clarity Act — digital assets have sold off alongside risk equities, with Bitcoin falling below $69,000 as institutional sentiment deteriorated.

What Happens Next

The next move in markets now depends less on economic data and more on geopolitics. If tensions escalate further — or if the Strait of Hormuz remains disrupted — oil could push significantly higher, forcing a deeper repricing across global assets.

Trump’s 48-hour deadline expires Monday evening New York time. Markets are not positioned for resolution. They are positioned for escalation. Until that changes, the path of least resistance for equities is lower, for oil is higher, and for central bank optionality is narrower by the day.