Following missile strikes by the United States and Israel on Iran, investors are increasingly worried that the conflict may escalate into a lengthy war, particularly given Donald Trump’s unpredictable nature as a leader. The economic ramifications have been significant, especially concerning the closure of the Strait of Hormuz, which is a critical conduit for a large portion of the world’s oil and gas supply. This closure is seen as a worst-case scenario for international energy markets.

The immediate impact of the hostilities has been felt in the surging global oil prices, which have risen 17% to over $85 per barrel. This spike has sent shockwaves throughout financial markets, indicating how interconnected and sensitive global economies are to geopolitical events. Notably, while the Australian stock market has shown some resilience, it still experienced a sharp decline of 3.8% over the week, reflecting the broader market's anxieties about rising energy prices and potential disruptions to supply chains.

Asian markets, particularly those in countries heavily dependent on energy imports, have experienced severe downturns amid the volatility. In South Korea, for example, the stock market has taken a significant hit as concerns grow over energy security and the potential for sustained conflict. Investors are now keenly watching for any signs of Trump reversing his stance, but the uncertainty continues to loom large in financial circles.