Global oil prices surged and equity markets plunged on Wednesday after President Donald Trump vowed retaliation for an Iranian attack, effectively ending a brief period of diplomatic calm that had buoyed investor sentiment.
The escalation marks a significant deterioration in US-Iran relations, reversing the optimism that had previously eased supply fears in the Middle East.
Brent crude and WTI posted sharp gains as traders repriced the risk of supply disruption in the Strait of Hormuz.
The market reaction was immediate and broad, with energy equities rising on the back of higher commodity prices while broader stock indices fell on renewed geopolitical anxiety.
The move underscores how quickly sentiment can shift when diplomatic channels appear to close.
This development follows a period of relative stability that had allowed markets to digest lower oil prices and reduced shipping risks.