Financial markets reeled after a sudden spike in Middle East violence pushed investors en masse into safe havens and sent energy prices sharply higher. COMEX gold traded at $5,400.6 per ounce, up 2.91%, while London spot gold reached $5,376.2 per ounce, up 1.86% as of the latest trade on March 2. Oil moves were even more dramatic: Brent opened nearly 13% higher at $81.57 per barrel and was quoted at $78.333, up 7.5% at the same time.
The price shock followed a swift military exchange on February 28 in which US and Israeli forces struck Iranian targets and Iran retaliated. Iran’s supreme leader, Ali Khamenei, and former president Mahmoud Ahmadinejad were reported killed in the strikes, and clashes have continued, keeping the region on high alert and market risk premia elevated.
The Iranian Islamic Revolutionary Guard Corps then announced a ban on any vessels transiting the Strait of Hormuz, a chokepoint between Iran and Oman through which roughly one fifth of the world’s oil and liquefied natural gas flows. Automatic tracking data showed vessel speeds around Hormuz slump to zero and many ships sheltering or rerouting, while state media reported an unauthorized tanker struck while attempting passage on March 1.
The Strait of Hormuz is narrow—only about two miles of two-way channel at its tightest—and, despite some alternative pipelines and rerouting options, analysts estimate a closure could remove between 8 million and 10 million barrels per day from global supply. Those figures dwarf the modest April increase of 206,000 barrels per day announced by eight major producers in an OPEC+ statement on March 1, a group that includes Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman.
Market strategists say the near-term oil trajectory is now driven by risk premium more than fundamentals. RBC’s Helima Croft warned that a wider regional war could push prices past $100 per barrel, while Rabobank expects oil to remain above $90 in the near term. On the metals side, banks are already upgrading their gold outlooks: ANZ projected a possible second-quarter peak near $5,800 an ounce on a mix of Fed easing expectations, deeper geopolitical risk and a softer dollar, and JPMorgan forecast a 22% rise in spot gold to about $6,300 by end-2026, having raised its longer-term price view.
For global markets and policymakers the immediate challenge is managing volatility and the risk of a sustained commodity shock. Higher oil will feed into consumer prices and fiscal pressures for net importers, tighten global financial conditions if central banks resist easing, and complicate efforts to rebuild confidence. Energy and shipping insurance costs, NATO and US force posture decisions in the region, and the readiness of strategic petroleum reserves will all be focal points in the coming weeks as traders and governments look for signals that supply can be restored or that the conflict is contained.