The US-Iran conflict escalates: Supreme Leader Khamenei is killed, the Middle East war reignites, and global markets face severe turbulence.
2026-03-02 06:45:45
The United States and Israel launched their largest and most powerful joint military strike against Iran to date over the weekend, resulting in the death of Ayatollah Ali Khamenei, the long-reigning Supreme Leader of the Islamic Republic of Iran. This action pushed the Middle East to the brink of broader conflict, prompting Iran to launch retaliatory airstrikes covering multiple Middle Eastern countries, drawing significant international attention. Following the incident, financial markets quickly went on high alert, with investors closely monitoring developments and preparing for potential sharp fluctuations. Current information indicates that this conflict poses a significant threat to energy supplies, the geopolitical landscape, and global economic stability.
Iranian state media officially announced early Sunday morning (March 1) that Supreme Leader Ayatollah Ali Khamenei had been killed in a joint US-Israeli strike. This news quickly spread globally and is considered one of the most disruptive events in Iran since the 1979 Islamic Revolution. Khamenei had led Iran since 1989, holding supreme decision-making power; his death not only creates a power vacuum but also could trigger internal power realignment and instability.
US President Trump has described the operation as his boldest foreign policy move of his term, especially with the November midterm elections approaching. He publicly stated that the strikes provide "the greatest opportunity ever for the Iranian people to regain control of their country." Trump issued a strong warning through the Truth Social platform, emphasizing that "the heavy and precise bombing will continue, week-round, or as needed, until the goal of lasting peace through the Middle East and around the world is achieved." He had previously stated on Saturday (February 28) that the core objective of the military action was to completely eliminate Iran's long-standing threat to the region and the United States, particularly preventing it from developing nuclear weapons capabilities.
In response to the US and Israeli strikes, Iran swiftly launched an unprecedented retaliatory operation, with missiles and drones targeting several neighboring countries hosting US military bases and Israel itself. Within Israel, air raid sirens and emergency mobile phone alerts were triggered, and large numbers of people rushed into air defense facilities. Although most of the multiple missile salvos launched by Iran were successfully intercepted by Israel's Iron Dome and other defense systems, they still caused localized panic and casualties.
The attacks have spread further, with explosions reported in the UAE, Jordan, Qatar, Bahrain, and Saudi Arabia. Video footage shows thick smoke billowing from the passageways of Dubai International Airport, with people fleeing in panic. The drone attacks directly caused damage to facilities and casualties at Dubai International Airport and Abu Dhabi Zayed International Airport. Iran's Foreign Ministry had already stated on Saturday that it would not "hesitate in the face of aggression led by the United States." A spokesperson for the Iranian Armed Forces issued a stern warning, stating that Israel and the United States would "experience a painful lesson unlike any in history." Trump responded on Sunday via Truth Social, warning that if Iran continued to retaliate, the US would use "unprecedented power" in response.
As the conflict escalates, global investors have fully shifted to a risk-averse mode, and significant risk-averse trading is expected after markets reopen. Traditional safe-haven assets such as the US dollar and gold are expected to strengthen significantly, while stocks face downward pressure. On Hyperliquid, a cryptocurrency platform that supports 24-hour trading, oil-related perpetual swaps have risen nearly 5% to $71.7 per barrel; gold futures have also climbed about 1.2% to $5,334 per troy ounce. These pre-market movements provide an initial indication of market reactions after the official opening.
In early Asian trading on Monday, the US dollar index rose slightly by about 0.3%, while non-US currencies generally weakened. The Australian dollar fell by more than 1%, hitting a one-week low. The US dollar opened down 0.34% against the Swiss franc, hitting a two-week low of 0.7667. The New Zealand dollar opened down about 0.8% against the US dollar, hitting a one-week low of 0.5945. The euro opened down nearly 0.4% against the US dollar, hitting a one-week low of 1.1764. The British pound opened down about 0.56% against the US dollar, hitting a more than one-month low of 1.3399. The US dollar fluctuated little against the Japanese yen, remaining close to the sideways trend, currently trading at 156.14, up about 0.04%.
The oil market has become one of the core focal points of this conflict. As the global energy lifeline, any supply disruption in the Middle East could trigger dramatic price swings. Former White House energy advisor Bob McNally predicts that if the situation shows no signs of de-escalation, crude oil futures prices could rise by $5 to $7 per barrel after opening at 6 PM Eastern Time on Sunday (7:00 AM Monday Beijing Time). Iran, OPEC's fourth-largest oil producer, has hinted at potentially blocking the Strait of Hormuz—a narrow passage connecting the Persian Gulf and the Arabian Sea. If traffic through the strait is disrupted, oil prices could potentially break through the $100 per barrel mark.
Data shows that by 2025, more than 14 million barrels of oil per day will be transported through the Strait of Hormuz, accounting for one-third of global seaborne crude oil exports. Approximately three-quarters of this will flow to China, India, Japan, and South Korea. As the world's second-largest economy, China relies on this passage for half of its crude oil imports. Any supply shock will quickly transmit to global energy prices and severely impact the economies of Asian oil-importing countries.
The next move in the conflict has become the market's primary concern. Eric Robertsen, Global Head of Research at Standard Chartered Bank, points out that investors have generally underestimated geopolitical risks. Although the US dollar has only weakened slightly this year, commodity-linked currencies have performed strongly, reflecting that the market is paying a higher premium for scarce resources and countries with improved terms of trade.
FedWatch Advisors analyst Ben Emons stated that the targeted strikes against the Tehran leadership significantly increased the tail risks of regime change, making the outcome highly uncertain. A rapid collapse of the Iranian regime could eliminate the oil blockade and the threat of nuclear escalation, triggering a rebound in market risk appetite; conversely, if the conflict prolongs and exacerbates supply disruptions, risk aversion will continue to dominate. Energy prices have become the most direct source of pressure, with continued increases in crude oil prices rapidly pushing up inflation expectations, particularly impacting Asian economies. After markets reopen, oil price movements and the US dollar exchange rate against Asian currencies will be the primary indicators for assessing the severity of the impact.
The military operation directly led to the closure of vast areas of airspace in the Middle East, severely impacting the aviation industry. Multiple airlines canceled hundreds of flights, dozens of aircraft were forced to divert en route, and some routes were suspended until at least next week. The chaos has spread far beyond the Middle East, reaching Brazil, Australia, and other countries, with international flights that originally passed through the region also being canceled.
According to aviation data agency Cirium, more than 1,800 flights to and from Middle Eastern countries were cancelled on Saturday, and another 1,400 flights in the region were affected on Sunday. Qatar Airways announced a complete temporary suspension of operations, while Emirates confirmed that services at Dubai International Airport—one of the world's busiest airports—were completely suspended. This severe disruption to global travel chains highlights the profound damage that conflict inflicts on civilian infrastructure.
Overall, the large-scale US-Israeli strikes against Iran have pushed the Middle East to the brink of a new round of high-risk confrontation, and the death of Supreme Leader Khamenei has further amplified uncertainty. Financial markets, geopolitics, and energy supplies are all facing unprecedented challenges, and the world needs to closely monitor developments to assess the potential long-term impacts.
The assassination of Iran's Supreme Leader Ayatollah Khamenei is a landmark event that has shocked the Middle East.
Iranian state media officially announced early Sunday morning (March 1) that Supreme Leader Ayatollah Ali Khamenei had been killed in a joint US-Israeli strike. This news quickly spread globally and is considered one of the most disruptive events in Iran since the 1979 Islamic Revolution. Khamenei had led Iran since 1989, holding supreme decision-making power; his death not only creates a power vacuum but also could trigger internal power realignment and instability.
US President Trump has described the operation as his boldest foreign policy move of his term, especially with the November midterm elections approaching. He publicly stated that the strikes provide "the greatest opportunity ever for the Iranian people to regain control of their country." Trump issued a strong warning through the Truth Social platform, emphasizing that "the heavy and precise bombing will continue, week-round, or as needed, until the goal of lasting peace through the Middle East and around the world is achieved." He had previously stated on Saturday (February 28) that the core objective of the military action was to completely eliminate Iran's long-standing threat to the region and the United States, particularly preventing it from developing nuclear weapons capabilities.
Iran launched a large-scale retaliation, with several Gulf countries subjected to missile and drone attacks.
In response to the US and Israeli strikes, Iran swiftly launched an unprecedented retaliatory operation, with missiles and drones targeting several neighboring countries hosting US military bases and Israel itself. Within Israel, air raid sirens and emergency mobile phone alerts were triggered, and large numbers of people rushed into air defense facilities. Although most of the multiple missile salvos launched by Iran were successfully intercepted by Israel's Iron Dome and other defense systems, they still caused localized panic and casualties.
The attacks have spread further, with explosions reported in the UAE, Jordan, Qatar, Bahrain, and Saudi Arabia. Video footage shows thick smoke billowing from the passageways of Dubai International Airport, with people fleeing in panic. The drone attacks directly caused damage to facilities and casualties at Dubai International Airport and Abu Dhabi Zayed International Airport. Iran's Foreign Ministry had already stated on Saturday that it would not "hesitate in the face of aggression led by the United States." A spokesperson for the Iranian Armed Forces issued a stern warning, stating that Israel and the United States would "experience a painful lesson unlike any in history." Trump responded on Sunday via Truth Social, warning that if Iran continued to retaliate, the US would use "unprecedented power" in response.
Financial markets are highly volatile, with risk aversion dominating trading expectations.
As the conflict escalates, global investors have fully shifted to a risk-averse mode, and significant risk-averse trading is expected after markets reopen. Traditional safe-haven assets such as the US dollar and gold are expected to strengthen significantly, while stocks face downward pressure. On Hyperliquid, a cryptocurrency platform that supports 24-hour trading, oil-related perpetual swaps have risen nearly 5% to $71.7 per barrel; gold futures have also climbed about 1.2% to $5,334 per troy ounce. These pre-market movements provide an initial indication of market reactions after the official opening.
In early Asian trading on Monday, the US dollar index rose slightly by about 0.3%, while non-US currencies generally weakened. The Australian dollar fell by more than 1%, hitting a one-week low. The US dollar opened down 0.34% against the Swiss franc, hitting a two-week low of 0.7667. The New Zealand dollar opened down about 0.8% against the US dollar, hitting a one-week low of 0.5945. The euro opened down nearly 0.4% against the US dollar, hitting a one-week low of 1.1764. The British pound opened down about 0.56% against the US dollar, hitting a more than one-month low of 1.3399. The US dollar fluctuated little against the Japanese yen, remaining close to the sideways trend, currently trading at 156.14, up about 0.04%.
Oil supply faces severe challenges, with the Strait of Hormuz becoming the biggest risk point.
The oil market has become one of the core focal points of this conflict. As the global energy lifeline, any supply disruption in the Middle East could trigger dramatic price swings. Former White House energy advisor Bob McNally predicts that if the situation shows no signs of de-escalation, crude oil futures prices could rise by $5 to $7 per barrel after opening at 6 PM Eastern Time on Sunday (7:00 AM Monday Beijing Time). Iran, OPEC's fourth-largest oil producer, has hinted at potentially blocking the Strait of Hormuz—a narrow passage connecting the Persian Gulf and the Arabian Sea. If traffic through the strait is disrupted, oil prices could potentially break through the $100 per barrel mark.
Data shows that by 2025, more than 14 million barrels of oil per day will be transported through the Strait of Hormuz, accounting for one-third of global seaborne crude oil exports. Approximately three-quarters of this will flow to China, India, Japan, and South Korea. As the world's second-largest economy, China relies on this passage for half of its crude oil imports. Any supply shock will quickly transmit to global energy prices and severely impact the economies of Asian oil-importing countries.
Investors are taking a deep dive into geopolitical risks, and the future trajectory remains highly uncertain.
The next move in the conflict has become the market's primary concern. Eric Robertsen, Global Head of Research at Standard Chartered Bank, points out that investors have generally underestimated geopolitical risks. Although the US dollar has only weakened slightly this year, commodity-linked currencies have performed strongly, reflecting that the market is paying a higher premium for scarce resources and countries with improved terms of trade.
FedWatch Advisors analyst Ben Emons stated that the targeted strikes against the Tehran leadership significantly increased the tail risks of regime change, making the outcome highly uncertain. A rapid collapse of the Iranian regime could eliminate the oil blockade and the threat of nuclear escalation, triggering a rebound in market risk appetite; conversely, if the conflict prolongs and exacerbates supply disruptions, risk aversion will continue to dominate. Energy prices have become the most direct source of pressure, with continued increases in crude oil prices rapidly pushing up inflation expectations, particularly impacting Asian economies. After markets reopen, oil price movements and the US dollar exchange rate against Asian currencies will be the primary indicators for assessing the severity of the impact.
Air traffic was thrown into massive chaos, and airspace in the Middle East was nearly paralyzed.
The military operation directly led to the closure of vast areas of airspace in the Middle East, severely impacting the aviation industry. Multiple airlines canceled hundreds of flights, dozens of aircraft were forced to divert en route, and some routes were suspended until at least next week. The chaos has spread far beyond the Middle East, reaching Brazil, Australia, and other countries, with international flights that originally passed through the region also being canceled.
According to aviation data agency Cirium, more than 1,800 flights to and from Middle Eastern countries were cancelled on Saturday, and another 1,400 flights in the region were affected on Sunday. Qatar Airways announced a complete temporary suspension of operations, while Emirates confirmed that services at Dubai International Airport—one of the world's busiest airports—were completely suspended. This severe disruption to global travel chains highlights the profound damage that conflict inflicts on civilian infrastructure.
Overall, the large-scale US-Israeli strikes against Iran have pushed the Middle East to the brink of a new round of high-risk confrontation, and the death of Supreme Leader Khamenei has further amplified uncertainty. Financial markets, geopolitics, and energy supplies are all facing unprecedented challenges, and the world needs to closely monitor developments to assess the potential long-term impacts.
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