How War in the Middle East Is Moving Stocks and Oil in April 2026

On Feb. 28, the United States and Israeli militaries carried out a round of airstrikes on Iran, citing a need to take action against Iran’s nuclear weapons program and calling for regime change within the country. Iranian Supreme Leader Ali Khamenei was killed in the attacks.

Iran has retaliated with missile and drone attacks on Israel, U.S. bases in the Middle East, and several U.S.-aligned Arab states, including the United Arab Emirates, Kuwait, Bahrain and Oman. Both sides of the conflict have struck targets within Iraq.

All of the countries mentioned have reported deaths in the recent exchange of strikes (including the U.S., which lost several soldiers stationed in the Middle East), raising fears that this may only be the beginning of a protracted regional war.

The Middle East is home to hundreds of millions of people and a large share of the world’s energy resources, which is why the clashes are moving financial markets worldwide, and could have a broad economic impact in the weeks ahead. Here’s what to know.

Commodities: Oil stays above $100 per barrel, threatening a return of inflation

Five out of the twelve member states of the Organization of the Petroleum Exporting Countries (OPEC) have been attacked in the recent hostilities, highlighting how the violence could imperil the global supply of oil. And in early March, the Iranian government closed the Strait of Hormuz to commercial ship traffic.

The Strait of Hormuz is a narrow waterway that connects the Persian Gulf to the ocean, making it a chokepoint for oil exports from Iran, Iraq, Kuwait, Saudi Arabia, the United Arab Emirates and several other oil-exporting countries. In 2025, about one-third of the total worldwide oil trade passed through the strait^[0]

Its closure represents a huge disruption to global oil supplies, and has driven the price of a barrel of oil, as measured by the Brent Crude price index, above $100 per barrel, up from less than $70 before the war.

That, in turn, poses a risk of a broad rise in overall consumer price levels, given how important oil is to so much of modern life. Gas prices across the U.S. have already jumped on the news.

Stocks: News-related volatility, Dow and Nasdaq dip into correction

All three U.S. indexes have whipsawed on war news over the last couple of months, and two of the three have entered correction territory.

The Dow Jones Industrial Average fell just over 10% between its peak on Feb. 10 and its trough on Mar. 27. The Nasdaq 100 index fell by nearly 12% between its Jan. 28 peak and its Mar. 30 trough, meaning that both indexes have technically experienced a stock market correction.

The S&P 500 index has narrowly avoided the 10% loss that defines a correction, as it fell slightly more than 9% between its peak on Feb. 2 and its trough on Mar. 30.

But in early April, the trend briefly reversed, with the Dow rising more than 3%, the S&P 500 rising nearly 4%, and the Nasdaq rising nearly 5% on reports that Iran and the Trump administration may be open to negotiations on some kind of ceasefire. However, the accuracy of those reports has been questioned.

How bad have oil price spikes been for the stock market in the past?

For now, the global market price of a barrel of oil is still around $100 per barrel. Oil has crossed the triple-digit mark three times in the past:

• In February 2008, oil prices rose above $100 per barrel due to a combination of high demand from developing countries like China and India, stagnating global production, and a decline in the value of the U.S. dollar. Over the following year, the S&P 500 fell more than 40%, although much of this is attributable to the outbreak of the global financial crisis rather than oil prices alone.

• In February 2011, oil prices breached $100 again due to Middle Eastern supply disruptions related to the Arab Spring uprisings. Over the next year, the S&P 500 rose about 3% — positive returns, but significantly lower than the index’s long-term average annual gain of 10% per year.

• In February 2022, oil broke $100 for a third time due to supply disruptions related to the Russia-Ukraine war. The S&P 500 sank about 8% over the next 12 months, although some of this was related to broad fears around the high inflation and rising interest rates of the time.

There are a couple of conclusions we can draw from these historical oil price spikes:

• Most were related to armed conflicts involving major oil producers, just like the current situation.

• All were associated with subpar stock market returns, although oil was not necessarily the only factor in these periods of underperformance, and there’s a wide variance in how badly the market performed.

Should you try to trade the recent news?

Day traders and futures traders may have no choice but to react to last weekend’s news, and its effect on markets, due to the short-term nature of those strategies.

However, there are a few things to keep in mind about trying to make quick profits off the recent headlines:

• It’s wise to be skeptical of one-off remarks from world leaders about geopolitical issues that move markets. Last year, markets whipsawed on Trump’s remarks about tariffs. They’d crash when he’d threaten tariffs, then rally when he suggested he might back off, then crash again when he’d mention new tariffs — lather, rinse, repeat.

• Reports predicting an imminent end to the conflict may be biased or unsubstantiated. In early April, markets rebounded after President Trump claimed in an online post that the Iranian government had asked for a ceasefire, but Iranian state media, as well as independent regional news sources like Al Jazeera, swiftly denied this claim.

And for investors with long time horizons, such as those building a retirement nest-egg, trading the recent volatility is unlikely to pay off. A 2022 study published in the Journal of Finance examined the top stocks purchased on Robinhood between May 2018 and August 2020, and found that their average 20-day return was -4.7%, suggesting that most short-term traders on that platform lost money in that period^[0]

Investing experts tend to recommend staying the course instead, and making consistent contributions to buy-and-hold investments like index funds throughout periods of volatility.

If you’re looking to invest for the long-term — but you think you might be prone to flinch at news events like those of the last weekend — taking yourself out of the equation by getting a robo-advisor or an online financial advisor to manage your portfolio may be worth considering, too.