US, Israel and Iran – 2nd March 2026

What's Happened?

The United States and Israel launched a large scale coordinated military operation against Iran on February 28, 2026, targeting Iranian leadership, ballistic missile sites, and key military infrastructure. The escalation follows stalled nuclear talks and months of rising tensions between the nations. President Donald Trump remarked,  “We will ensure that Iran does not obtain a nuclear weapon. It is a very simple message”.

Iran's Supreme National Security Council confirmed confirm that Iran’s Supreme Leader Ayatollah Ali Khamenei was killed in the initial strikes, along with dozens of senior military officials.

Iran retaliated with missile and drone strikes targeting Israel and US bases across the Middle East, including in Bahrain, Kuwait, Qatar, Saudi Arabia, and the UAE resulting in multiple casualties. Missile strikes also hit Dubai and Abu Dhabi airports - two of the busiest airports globally, leaving one dead and hundreds of thousands travellers stranded.

What to look out for next

Oil prices have subsequently rallied to >US$80/barrel, a 14-month high, as the war threatens the closure of the Strait of Hormuz. The Strait of Hormuz ships approximately 20% of global oil. A sustained oil price rally could have a significant inflationary impact in combination with rising shipping insurance premiums. This remains a key focus for investors, as it has the potential to derail the outlook for further interest rate cuts, which has been a key driving force behind the global market melt up.

Why it's important not to react

Markets are down this morning, but perhaps not as aggressively as you might have thought. Regardless of what happens in markets over the next few days and weeks, it's worth remembering that history shows us that markets rebound after major events, and often the best days can follow the worst.