Global markets opened the holiday-shortened trading week gripped by uncertainty, as investors weigh the prospects of a swift diplomatic breakthrough against the danger of a major escalation in the Iran conflict, a scenario that could drive oil prices and bond yields even higher.
With Donald Trump setting a deadline for Tehran to strike a deal and reopen the Strait of Hormuz, market sentiment has entered a volatile phase. Analysts say this uncertainty is the most pressing challenge facing investors and corporations, as it complicates long-term planning and limits the ability to hedge against rapidly evolving risks.
The ongoing conflict, now stretching beyond a month, coupled with a de facto disruption of shipping through the strategic waterway, is raising fears of one of the most severe energy crises in modern history. Even in the event of a diplomatic agreement, analysts warn that markets may take time to stabilize and reflect any progress, reports Al-Rai daily.
Leading financial voices have sounded the alarm. Jamie Dimon, chief executive of JPMorgan Chase, warned that a war involving Iran could trigger significant shocks across global markets.
“A war with Iran increases the likelihood of major shocks to oil and commodity prices, reshaping supply chains and potentially driving up inflation and interest rates,” Dimon said in his annual letter to shareholders.
He described geopolitical tensions, including the wars in Ukraine and Iran, as the most significant risks facing the global economy, adding that the outcome of these conflicts could play a decisive role in reshaping the future economic order.
Dimon also highlighted broader structural concerns, including persistent inflation, volatility in private markets, and weaknesses in banking regulation, noting that some post-2008 reforms have introduced inefficiencies that could weigh on financial stability and lending.
In commodities markets, oil prices retreated in volatile trading as investors monitored developments in US-Iran negotiations and the possibility of a temporary ceasefire. Brent crude fell to around $107 per barrel, while US West Texas Intermediate dropped to near $109, reflecting cautious optimism over diplomatic efforts.
At the same time, concerns over supply disruptions remain elevated, particularly due to shipping risks in the region.
Gold prices also declined, pressured by a stronger US dollar and fading expectations of a Federal Reserve rate cut, especially after stronger-than-expected US economic data reinforced a more cautious monetary outlook.
Meanwhile, bond markets are quietly adjusting to rising inflation expectations. The yield on the benchmark 10-year US Treasury note climbed to 4.36%, up from 3.96% before the conflict, approaching its highest level since mid-2025 as investors scale back bets on interest rate cuts this year.
Overall, markets remain caught between fragile hopes for de-escalation and the danger of a broader conflict, a balance that continues to drive volatility across asset classes.
