Markets Tremble as Israel-Iran War Risks Trigger Asset Chaos

A worst-case escalation of the Israel-Iran conflict, potentially closing the Strait of Hormuz and igniting a regional war, would rattle global markets, reshaping commodities, forex, stocks, and cryptocurrencies. As tensions surged on June 13, 2025, oil soared and safe-havens rallied. This analysis explores asset reactions in the short term (days to weeks) and long term (months to years), urging bold navigation of turbulent markets.

Oil and Gold Brace for Volatility

If Iran blocks the Strait of Hormuz, a chokepoint for 18–21 million barrels of daily oil, Brent crude, at $74.23, and WTI, at $72.98 on June 13, 2025, could spike to $90–$100 in weeks, as Iran’s 3.4 million bpd output falters. Natural gas, at $3.666 per MMBtu (+2.95%), might climb amid regional supply fears. Gold, despite a 1.03% dip on June 16, could rally past $3,455/oz to $3,600 short term as a safe-haven, though volatility persists. Long term, oil could ease to $60–$70 by late 2025 if US shale ramps up, but a sustained conflict might hold prices at $80–$90. Gold’s gains could wane with de-escalation, though inflation might sustain its appeal.

Dollar Rises, Pound Faces Pressure

The US Dollar, with the Dollar Index at 98.30 (+0.45%) on June 13, could surge to 100 in a risk-off wave, weighing on the Pound Sterling, which fell to 1.35597 (-0.38%) from 1.3630. GBP/USD might drop to 1.3400 short term if tensions escalate, while yen and Swiss franc strengthen. Long term, Dollar strength could endure if Federal Reserve rate cuts (55 basis points by 2025-end) are curbed by oil-driven inflation, though global slowdowns might soften it. The Pound could recover to 1.3750 by 2026 if Bank of England rates fall to 3.25% and UK inflation eases, but geopolitical risks limit gains.

Stocks and Crypto Navigate Turbulence

The S&P 500, down 1.13% to 5,976.97 on June 13, could plummet 15–20% to 4,800–5,200 in weeks if inflation spikes, hitting tech and travel stocks hardest. Energy and defense sectors might rally, driven by oil and military demand. Long term, stagflation could cap equities, but a limited conflict might lift the S&P 500 to 6,000–6,300 by year-end. Cryptocurrencies, with Bitcoin at $104,343, could dip below $100,000 short term, shedding $400 billion in market cap. By 2026, Bitcoin might reach $120,000 as an inflation hedge, though altcoins lag without renewed risk appetite.

Trade and Policy Face New Risks

A Strait closure could disrupt $1 trillion in annual global trade, spiking shipping costs and delaying goods, while oil-driven inflation might force central banks to pause rate cuts, squeezing growth. Short term, markets face supply chain chaos; long term, diversified trade routes and energy sources could mitigate risks. Hedging with gold and energy stocks counters immediate shocks, but systemic trade fragility demands broader resilience.

This market upheaval exposes global vulnerabilities. De-escalation talks offer hope, but a Strait closure remains a wildcard. These asset swings signal a defining challenge: crafting agile strategies to thrive in a world where geopolitical shocks reshape economic realities, demanding innovative adaptation.