This article originally appeared in NerdWallet's investing newsletter, the Nerdy Investor, which provides weekly updates on how the conflict in the Middle East is affecting oil and financial markets along with other market-moving news. You can subscribe for free here.
On Feb. 28, the United States and Israeli militaries carried out a round of airstrikes on Iran, citing a need to take action against Iran’s nuclear weapons program and calling for regime change within the country. Iranian Supreme Leader Ali Khamenei was killed in the attacks.
Since then, the U.S. has struck Iran repeatedly, and Iran has retaliated with missile and drone attacks on Israel, U.S. bases in the Middle East, and several U.S.-aligned Arab states, including the United Arab Emirates, Kuwait, Bahrain and Oman. Both sides of the conflict have struck targets within Iraq.
Although both sides have engaged in talks throughout the war that have led to brief, temporary ceasefires, a lasting end to the war remains elusive.
The Middle East is home to hundreds of millions of people and a large share of the world’s energy resources, which is why the conflict moving financial markets worldwide. Here’s what to know.
Commodities: Oil repeatedly spikes above $100 per barrel, threatening a return of inflation
Five out of the twelve member states of the Organization of the Petroleum Exporting Countries (OPEC) have been attacked in this year's hostilities, highlighting how the violence imperils the global supply of oil. And the Strait of Hormuz has been closed to commercial ship traffic since early March.
The Strait of Hormuz is a narrow waterway that connects the Persian Gulf to the ocean, making it a chokepoint for oil exports from Iran, Iraq, Kuwait, Saudi Arabia, the United Arab Emirates and several other oil-exporting countries. About 25% of the total worldwide oil trade passes through the strait.
Its closure represents a huge disruption to global oil supplies, and has driven the price of a barrel of oil, as measured by the Brent Crude price index, above $100 per barrel several times in 2026, including in March, April, July and September. It has not dropped below $70 since the beginning of the war, even during long lulls in the fighting.
That, in turn, poses a risk of a broad rise in overall consumer price levels, given how important oil is to so much of modern life. Gas prices across the U.S. have been elevated throughout the year.
Broader impact: Interest rate hike odds rise, stocks wobble
All three U.S. indexes have whipsawed on war news over the course of the year. The Dow Jones Industrial Average and Nasdaq 100 indexes briefly fell more than 10% and entered correction territory in the spring, although both have since recovered and currently have positive year-to-date returns.
A major second-order driver of stock market volatility has been the war's impact on inflation, and therefore on interest rates. Rising consumer price levels (pulled up by the rising price of oil) have stopped the Federal Reserve from cutting interest rates, as it did in late 2025.
Now, markets widely expect the central bank to raise interest rates at least once before the end of the year. That prospect can spook the stock market, as higher benchmark interest rates mean higher borrowing costs for companies and consumers alike. Major stock indexes have often swooned in 2026 after economic data releases, such as Consumer Price Index reports or jobs reports, that show an overheated economy and strengthen the case for rate increases.
How bad have oil price spikes been for the stock market in the past?
For now, the global market price of a barrel of oil is still around $100 per barrel. Oil has crossed the triple-digit mark three times before the current conflict:
- In February 2008, oil prices rose above $100 per barrel due to a combination of high demand from developing countries like China and India, stagnating global production, and a decline in the value of the U.S. dollar. Over the following year, the S&P 500 fell more than 40%, although much of this is attributable to the outbreak of the global financial crisis rather than oil prices alone.
- In February 2011, oil prices breached $100 again due to Middle Eastern supply disruptions related to the Arab Spring uprisings. Over the next year, the S&P 500 rose about 3% — positive returns, but significantly lower than the index’s long-term average annual gain of 10% per year.
- In February 2022, oil broke $100 for a third time due to supply disruptions related to the Russia-Ukraine war. The S&P 500 sank about 8% over the next 12 months, although some of this was related to broad fears around the high inflation and rising interest rates of the time.
There are a couple of conclusions we can draw from these historical oil price spikes:
- Most were related to armed conflicts involving major oil producers, just like the current situation.
- All were associated with subpar stock market returns, although oil was not necessarily the only factor in these periods of underperformance, and there’s a wide variance in how badly the market performed.
Should you try to trade the Middle East news?
Day traders and futures traders may have no choice but to react to last weekend’s news, and its effect on markets, due to the short-term nature of those strategies.
However, there are a few things to keep in mind about trying to make quick profits off the recent headlines:
- It’s wise to be skeptical of one-off remarks from world leaders about geopolitical issues that move markets. Last year, markets whipsawed on Trump’s remarks about tariffs. They’d crash when he’d threaten tariffs, then rally when he suggested he might back off, then crash again when he’d mention new tariffs — lather, rinse, repeat.
- Reports predicting an imminent end to the conflict may be biased or unsubstantiated. In early April, markets rebounded after President Trump claimed in an online post that the Iranian government had asked for a ceasefire, but Iranian state media, as well as independent regional news sources like Al Jazeera, swiftly denied this claim.
And for investors with long time horizons, such as those building a retirement nest-egg, trading the recent volatility is unlikely to pay off. A 2022 study published in the Journal of Finance examined the top stocks purchased on Robinhood between May 2018 and August 2020, and found that their average 20-day return was -4.7%, suggesting that most short-term traders on that platform lost money in that period.
Investing experts tend to recommend staying the course instead, and making consistent contributions to buy-and-hold investments like index funds throughout periods of volatility.
If you’re looking to invest for the long-term — but you think you might be prone to flinch at news events like those of the last weekend — taking yourself out of the equation by getting a robo-advisor or an online financial advisor to manage your portfolio may be worth considering, too.
Neither the author nor editor owned positions in the aforementioned investments at the time of publication.
Article sources
NerdWallet writers are subject matter authorities who use primary, trustworthy sources to inform their work, including peer-reviewed studies, government websites, academic research and interviews with industry experts. All content is fact-checked for accuracy, timeliness and relevance. You can learn more about NerdWallet's high standards for journalism by reading our editorial guidelines.
- 1.International Energy Agency. Strait of Hormuz Factsheet. Accessed Apr 3, 2026.
- 2.CME Group. FedWatch. Accessed Sep 9, 2026.
- 3.Journal of Finance. Attention‐Induced Trading and Returns: Evidence from Robinhood Users. Accessed Mar 2, 2026.
