US-Iran crisis

The US-Israeli military campaign that began on Saturday has already killed Iran’s Supreme Leader Ali Khamenei and senior commanders, triggered retaliatory strikes across the region and raised the spectre of prolonged disruption to global energy flows.

ADVERTISEMENT

ADVERTISEMENT

While diplomats scramble and the UN calls for restraint, certain defence contractors and energy majors have emerged as early market victors.

As the conflict enters its fourth day, demand for advanced weaponry, missile-defence systems and intelligence platforms is projected to surge.

Lockheed Martin’s stock, the world’s largest defence contractor by revenue, hit a new all-time high on Monday, closing at $676.70 after rising over 4%.

Its F-35 fighters, precision munitions and radar systems are central to the air campaign under way over Iran.

The rally extended across the defence sector.

Northrop Grumman shares jumped 6%, lifted by its stealth-bomber and missile-defence technologies.

RTX, formerly Raytheon, gained nearly 5% while L3Harris Technologies and General Dynamics also recorded solid increases.

Palantir Technologies, whose data-analytics tools support intelligence operations, rose almost 6%.

European companies followed the upward trend on a more modest scale. Germany’s Renk and Italy’s Leonardo posted gains as investors eyed possible increases in NATO procurement and export orders.

Analysts note that defence budgets, already earmarked for growth in 2026, now face even fewer hurdles in Washington and European capitals.

With President Trump stating that operations could last “four to five weeks” or “far longer”, and Iran continuing missile and drone barrages, markets are positioning for weeks of high-intensity military activity.

The gains reflect classic geopolitical risk pricing.

Other market outliers

These rises stand in sharp contrast to broader equity weakness, highlighting how narrowly the benefits are concentrated. Beyond the pure-play defence names, energy companies have been the other clear outperformers, riding the oil and gas wave.

Iranian retaliation has already included strikes to energy sites in Saudi Arabia and Qatar, threats to close the Strait of Hormuz, which could choke off roughly 20% of global oil supply and send energy prices soaring.

The international benchmarks for oil, Brent crude (BZ) and West Texas Intermediate (WTI), are trading at over $82.50 and $75.50 respectively, at the time of writing.

Alongside them, integrated oil majors moved swiftly higher.

ExxonMobil shares rose more than 4% recording a new all-time high, while Chevron, Occidental Petroleum and ConocoPhillips posted comparable gains.

In Europe, Shell and TotalEnergies advanced in line with the global pricing surge.

The QatarEnergy LNG production halt announced on Monday, following Iranian drone strikes on Ras Laffan and Mesaieed facilities, sent European benchmark TTF gas prices over 50% higher, reaching €62/MWh by Tuesday.

Markets reacted swiftly as the indefinite shutdown raised immediate fears of rerouted demand and renewed energy inflation risks in Europe.

LNG equities climbed notably since Monday’s open on the news.

Cheniere Energy, the largest LNG exporter in the US, Venture Global and Australia’s Woodside Energy, all saw intraday strength at the start of the week.

However, analysts caution that actual substitution will take time due to shipping and contract constraints, keeping price action geopolitically sensitive.

The European Commission announced it is closely tracking both price and supply developments and will convene an Energy Task Force with Member States, in liaison with the International Energy Agency, for a meeting sometime this week.

The benchmark European gas price, traded on the Dutch TTF hub, rose by as much as 45% to around €46 per megawatt-hour in early afternoon trading.

ADVERTISEMENT

ADVERTISEMENT

UK natural gas prices also surged, with the NBP benchmark climbing sharply in tandem with continental markets.

High market volatility has driven sharp minute-by-minute swings.

The sharp increase follows US and Israeli strikes on Iran, which have heightened tensions in a region critical to global energy flows.

QatarEnergy announced early Monday afternoon that it had halted liquefied natural gas production linked to the giant North Field gas reservoir following an attack on its facilities, but gave no further details as to the extent of the impact on operations.

Strait of Hormuz disruption raises global concerns

A large proportion of the world’s energy supply comes from the Middle East, and before the announcement from Qatar, the seaborne oil and gas transport was at the centre of market fears.

The Strait of Hormuz, a narrow maritime passage largely controlled by Iran, is one of the world’s most important energy chokepoints for oil and LNG, including exports from Qatar.

Iran has moved to block traffic through the strait following the strikes, raising concerns about supply interruptions.

“In modern history, the Strait of Hormuz has never been actually closed, albeit a temporary slowing of traffic has occurred,” said Maurizio Carulli, global energy analyst at Quilter Cheviot.

He added that “about 20% of global oil supply transits through the Strait of Hormuz and 38% of seaborne crude oil trade.”

Carulli does not expect oil shipping companies to send through their vessels until “the military situation de-escalates”, due to the risk of ship damage or seizures, as well as temporary unavailability of insurance cover.

“Satellite data shows that oil tanker transit had virtually halted over the weekend, a precautionary measure by shipping companies,” he added.

Any sustained disruption could affect LNG shipments from Qatar, which supplies around 12% to 14% of Europe’s LNG imports.

Europe exposed to global competition

While Europe does not rely primarily on Qatari gas, analysts say the indirect impact could still be significant.

If supplies to Asia are disrupted, buyers there may seek alternative cargoes, increasing global competition for LNG.

This would likely push prices higher worldwide, including in Europe.

Qatar, the world’s third-largest LNG exporter after the United States and Australia, has become an increasingly important supplier to Europe since Russia’s invasion of Ukraine in 2022 forced European countries to reduce their dependence on Russian pipeline gas.

Low storage levels increase vulnerability

Europe’s relatively low gas storage levels have added to market anxiety.

Storage across the European Union is currently below 30% capacity as the winter heating season draws to a close, compared with around 40% at the same point last year.

Germany and France, the bloc’s two largest economies, are among the most vulnerable.

Germany’s gas storage facilities were 20.5% full as of Saturday, while France’s stood at 21%, according to data from Gas Infrastructure Europe.

Lower reserves leave countries more vulnerable to supply disruptions and price volatility, particularly if global LNG markets tighten further.

Published on
02/03/2026 – 10:23 GMT+1

European markets cratered on Monday as the fallout from a dramatic weekend of US and Israeli strikes on Iran rattled investors across the continent.

ADVERTISEMENT

ADVERTISEMENT

The Euro Stoxx 50 shed 2% at the open, with the broader pan-European Stoxx 600 close behind at -1.8% — and the selling shows no signs of stopping.

Regional indices from Frankfurt to Paris to Milan are all in the red, spooked by an escalating conflict that has choked shipping traffic through the Strait of Hormuz and drawn Hezbollah into the fray on Sunday.

In London, the FTSE 100 is having the more durable response, only falling around 0.3%.

However, Germany’s DAX 30 edged down 1% whilst France’s CAC 40 dropped more than 1.4%.

Italy’s FTSE MIB fell roughly 1.8%, the Netherlands’ NL 25 declined over 1% and Spain’s IBEX 35 has seen a sharp drop of more than 2%.

Before European markets opened, Japan’s Nikkei 225 was already in free fall and is currently down over 2.3%.

Likewise, US futures opened lower on Sunday with the E-mini S&P 500 dropping over 1.6% and E-mini NASDAQ down more than 2%.

In the UAE, regulators have taken the dramatic step of shutting down both the Abu Dhabi Securities Exchange and the Dubai Financial Market for the next two days.

The Capital Market Authority made no attempt to dress it up and the closures are explicitly designed to prevent panic selling after a staggering 165 ballistic missiles, 541 drones, and 2 cruise missiles rained down on the country over just 48 hours.

Oil and precious metals

While global markets sink into negative territory, crude oil prices rose in early trade on Monday morning as investors continue to weigh the potential impact of escalating tensions in the Middle East on the supply of energy.

The price of a barrel of US benchmark crude initially surged by about 8%. It later traded 5.9% higher at $71.00 per barrel. Brent crude rose 6.2% to $77.38 per barrel.

Gold is up roughly 2.5% while silver climbed 2% and platinum 1.2% as well.