The United States and Israel launched the largest joint military strike we have ever seen against Iran. Within hours, it was announced that Iran’s Supreme Leader, Ali Khamenei, was dead. Iran confirmed his death, and the Middle East officially entered a phase of dangerous escalation.
WHAT EXACTLY HAPPENED
Over the weekend, the U.S. and Israel began a massive operation involving airstrikes and drone attacks across Iranian territory. According to reports, around 500 military targets were hit: facilities belonging to the Islamic Revolutionary Guard Corps, air defense systems, missile and drone bases, military airports, and even command and control installations.
The most critical moment, however, was the strike on the compound where Khamenei was located in Tehran. Shortly after the attacks, Donald Trump wrote on Truth Social that “one of the most evil men in history is dead” and that the bombings would continue for as long as necessary.
At first, Iranian media denied the reports. A few hours later, with a black mourning frame on state television and Quran recitations on air, his death was officially announced and 40 days of national mourning were declared.
Reports speak of hundreds killed and injured, in both military and civilian facilities. Washington argued that the operation aimed to eliminate immediate threats and permanently prevent the development of nuclear weapons. Iran, for its part, insists that it does not seek a nuclear arsenal. What is certain is that negotiations had essentially collapsed before the strike.
IRAN’S RETALIATION
Tehran’s response came quickly and was unprecedented in intensity. Missile attacks were launched toward Israel, while at the same time targets in Gulf countries hosting U.S. bases were placed in the crosshairs.
Saudi Arabia, United Arab Emirates, Qatar, Bahrain. Sirens sounded in Tel Aviv. Explosions were reported in Dubai. Airports such as Dubai International Airport and Zayed International Airport sustained damage from drone strikes. Thousands of flights were canceled within two days, and large sections of Middle Eastern airspace were closed.
Iran’s message was clear. If this is an existential threat, we will respond with everything we have. And that is precisely what raises the risk to levels not seen in years.
THE STRAIT OF HORMUZ AND OIL
Now we come to the point that matters most for investors: the Strait of Hormuz. Roughly one third of the world’s seaborne oil trade passes through it, more than 14 million barrels per day. Iran warned that passage is no longer safe. If transit is restricted or blocked, oil could surge above $100 per barrel.
In futures markets, we already saw moves of around 5 percent over the weekend. Gold moved higher. The dollar strengthened as a safe haven. Bitcoin showed sharp volatility before recovering part of its losses. All signs point to markets shifting into risk off mode.
What does this mean in practical terms? If the escalation continues and there are no signs of de escalation, it is very likely we will see pressure on equities at the open. At the same time, energy will be in focus, and a prolonged rise in oil prices would reignite inflation concerns and put pressure back on central banks.
On the other hand, even a small indication that the conflict will not broaden could trigger a swift rebound. Markets often price in the worst case scenario. If that scenario does not materialize, relief rallies tend to follow.
Many are already comparing the situation to Iraq in 2003. Unclear objectives, discussions about weapons of mass destruction, and the risk of prolonged involvement. The major difference today is that there is no broad international coalition and no formal authorization from Congress.
