Reuters Analysis: From oil price surges to stock volatility: How Middle East conflict is driving markets
An escalating conflict in the Middle East rocked global markets on Monday, as the prospect of a protracted war pushed up energy prices and hit travel stocks and regional assets.
Israel attacked Lebanon in response to Hezbollah attacks, while Tehran fired missiles and drones at Israel, Gulf states and a British air base in remote Cyprus.
US President Donald Trump said the military campaign against Iran could continue for the next four weeks, according to an interview with the Daily Mail on Sunday.
Here are some of the assets that have seen the biggest moves since the conflict began on Saturday:
OIL, NATURAL GAS AND ENERGY COMPANIES
Crude oil prices rose as the conflict shut down oil and gas plants across the Middle East and disrupted shipping in the Strait of Hormuz, through which about 20% of global oil supplies pass.
Shares of U.S. and European energy companies, including Exxon Mobil (XOM.N), opens a new tab and Shell (SHEL.L), were some of the biggest gainers, following a more than 8% rise in crude oil prices.
"We expect the likely duration and physical volume impact of the military escalation will maintain upward pressure on both commodity prices and energy stocks, reducing the risk of oil price weakness in 2026," Piper Sandler analysts said in a note.
Natural gas prices also rose after Qatar halted production of liquefied natural gas. Qatar's LNG accounts for about 20% of global supply.
Shares of natural gas companies such as CNX Resources (CNX.N), Williams Companies (WMB.N) rose more than 1% each, while the United States Natural Gas ETF (UNG.P) added 3.7%.
A line graph showing the prices of oil and energy companies
AIRLINES AND TRAVEL COMPANIES
Ryanair (RYA.I), IAG (ICAG.L), American Airlines (AAL.O) and United Airlines (UAL.O) were among the airline stocks that fell as major Middle Eastern hubs closed.
Airline stocks often fall when crude oil prices rise because higher oil prices usually mean higher jet fuel costs, which is one of airlines' biggest expenses.
The S&P 1500 passenger airline index (.SPCOMAIR) had fallen nearly 3%.
"Previous conflicts have led to an immediate hit to passenger demand in the affected region. This tends to combine with a 'knock-on' impact on demand and booking confidence across the wider airline networks," JP Morgan analysts said in a note.
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Travel companies such as Booking Holdings (BKNG.O) and Expedia Group (EXPE.O) fell along with hotel chains such as Hyatt Hotels (HN) and cruise operators including Carnival (CCL.N).
Norwegian Cruise Line Holdings (NCLH.N) warned of uncertainty around fuel costs this year due to escalating geopolitical tensions.
A line chart showing the stock performance of travel-related companies
DEFENSE COMPANY SHARES
Shares of major US defense contractors Northrop Grumman (NOC.N), General Dynamics (GD.N), RTX (RTX.N) and Lockheed Martin (LMT.N) rose between 1.1% and 3.7% in early trading.
“The attacks, or at least their scope, reinforce the rise in US defense spending and key initiatives like Golden Dome and the replenishment and augmentation of defensive missiles and interceptors,” Jefferies analysts said in a note.
Defense companies in Europe also rose. The United Kingdom's BAE Systems (BAES.L), Germany's Rheinmetall and Italy's Leonardo all posted gains.
A line chart showing the performance of global defense companies in the last three months
TANK AND FREIGHT COMPANIES
Shares of shipping and tanker companies rose as the conflict disrupted the key Hormuz and Suez waterways, constricting capacity and raising expectations for higher freight rates.
European shipping giants Maersk and Hapag-Lloyd rose 7.8% and 6.7% respectively, while shares of US firm Nordic American Tankers rose more than 3%.
Oil tanker companies Teekay Tankers International Seaways also advanced.
A line chart showing the stock prices of tanker and shipping companies since the beginning of the year
TRADITIONAL SAFE CURRENCIES AND GOLD
Gold prices rose as investors fled to traditional safe assets.
The dollar index, which compares the U.S. dollar against a basket of other major global currencies, rose 0.6%, with the U.S. currency gaining ground against the Japanese yen, Swiss franc and euro.
JP Morgan analysts said a sustained rise in energy prices should strengthen the dollar, while also weighing on the currencies of countries that are major importers of this commodity, such as those in Central and Eastern Europe.
A bar chart showing the dollar's performance against major currencies on March 2
Middle Eastern dollar bonds and stocks
Long-term dollar-denominated international bonds from a number of Middle Eastern countries, including Qatar, Oman and Saudi Arabia, fell sharply on concerns about the spread of the conflict.
Stock exchanges in Qatar and Kuwait also saw significant declines.
The broader risk-aversion movement also hit other emerging market economies, with dollar bonds in Egypt and Turkey among those falling.
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