US-Iran Conflict and the Strait of Hormuz: Markets, Ceasefire, and Diplomatic Fallout

A 40-day US-Iran conflict, triggered by US-Israel strikes on February 28, 2026, disrupted energy markets and shipping. More than 3,400 people were reported killed during the fighting. Iran shut the Strait of Hormuz, a key oil route, for weeks. The crisis forced a US president to step back after warning that "a whole civilization will die tonight."

The shutdown of the Strait of Hormuz hit oil prices and equities fast. Brent crude jumped above $120 a barrel in early March 2026. QatarEnergy declared force majeure on all exports after the surge. Markets fell as oil crossed $110, with Asia hit hardest due to Gulf dependence. The turmoil later eased after a ceasefire was announced on April 7.

As the strait closed, risk assets sold off across regions. Japan’s Nikkei fell more than 5% in one session. Germany’s DAX dropped 2.6%, while France’s CAC lost 2.7%. Britain’s FTSE fell by nearly 2%. J.P. Morgan said sustained high Brent could cut first-half 2026 growth by 0.6%.

Once talks produced a halt in fighting, markets rebounded sharply. WTI slid 18% after the ceasefire news. The Dow rose 1,374 points, and the S&P 500 gained 2.56%. South Korea’s Kospi climbed nearly 7%. An analyst noted crude stayed $30 above pre-war levels. Petrol futures were still about 70 cents higher.

The ceasefire announced on April 7 paused hostilities, rather than ending them. Pakistan’s Prime Minister Shehbaz Sharif brokered the two-week arrangement and hosted talks in Islamabad. Iran agreed to reopen the Strait of Hormuz as part of the deal. Israel said the agreement did not cover Lebanon. Israeli bombardment there continued after April 7.

Key conflict milestones were reported across 2025 and 2026, alongside market moves. The timeline below summarises major events and policy shifts. It also includes the strait closure and the ceasefire window. These dates mattered for oil flows, investor sentiment, and diplomatic alignments.

Date	Event
Jun 2025	Israel launches 12‑day war on Iran; US joins strikes on nuclear facilities. Ceasefire follows.
Jan 2026	Iran massacres protesters. Trump threatens intervention. US carries out Venezuela raid; Maduro abducted.
Feb 28	US and Israel launch coordinated strikes. Supreme Leader Khamenei killed. Iran closes Strait of Hormuz.
Mar 9	Oil tops $100/bbl for first time since 2022. Nikkei plunges 5%. Global panic sets in.
Apr 7	Trump threatens "a whole civilization will die tonight." Russia and China veto UN Hormuz resolution.
Apr 7-8	Pakistan brokers 2‑week ceasefire. Iran agrees to reopen Hormuz. Israel says deal excludes Lebanon.

Strait of Hormuz: US objectives and legal questions

US explanations for the war varied over time. Officials pointed to protecting US assets from Iranian retaliation. Other claims included degrading missiles and blocking a nuclear weapon. The list also mentioned securing Iran’s oil resources and seeking regime change. Critics said these were separate aims presented as one campaign. The strikes proceeded without congressional approval.

Donald Trump returned to office in 2025 and revived "maximum pressure" on Tehran. In 2018, Trump withdrew from the multilateral nuclear deal. Economic penalties then expanded, and Iran answered with "maximum resistance". After Iran’s security forces massacred protesters in January 2026, Trump threatened action. In February 2026 polling, 21% backed strikes, while 49% opposed them.

Strait of Hormuz: Israel’s role and Netanyahu’s statements

Benjamin Netanyahu had pushed for US action against Iran for decades. The opening day included the killing of Supreme Leader Ali Khamenei. Netanyahu said US participation "allows us to do what I have been hoping to do for 40 years." As a ceasefire neared, Netanyahu adjusted the framing. Netanyahu said, "It's the American war against Iran. We are America's ally."

Domestic politics also shaped Israel’s approach, analysts said. Netanyahu faced trial on three corruption charges during the conflict. Elections were scheduled for October 2026, and war dynamics affected the opposition gap. One Israeli analyst said, "Netanyahu is not interested in the medium and long term." Former CIA officer John Kiriakou responded, "That's not what you were saying two weeks ago."

Strait of Hormuz: UN deadlock and ally reactions

The UN Security Council struggled to respond as fighting intensified. Russia and China vetoed a draft aimed at protecting commercial shipping. They said the proposal was biased against Iran. Earlier, the Council passed a measure condemning Iran’s attacks on Gulf neighbours. The vote was 13-0, with Russia and China abstaining. Iran’s ambassador called it "a manifest injustice" and "a blatant misuse of the Security Council mandate."

US partners mostly used cautious language while urging restraint. Some states privately warned against strikes on civilian infrastructure. Gulf states balanced fear of retaliation with reliance on US protection. Kuwait and the UAE intercepted dozens of Iranian drones and ballistic missiles. Qatar’s Foreign Ministry said "unchecked escalation could take the conflict to a point where it cannot be controlled" and "there are no winners in the continuation of this war."

US political reaction hardened after the April 7 threat. Nancy Pelosi said "Donald Trump's instability is clearer and more dangerous than ever". Pelosi urged the Cabinet to consider the 25th Amendment. Bernie Sanders called it "the ravings of a dangerous and mentally unbalanced individual." Senator Ron Johnson said he hoped the threat was "bluster". Johnson added, "we are not at war with the Iranian people."

The Iran conflict was Trump’s largest war after returning in January 2025. Strikes were also approved in Somalia, Iraq, Nigeria, and Syria. The US also bombed Venezuela and abducted its president. In 2025, the US carried out or supported 622 overseas bombings. Trump had campaigned against "endless wars". The April 7 ceasefire paused fighting, but key issues remained unresolved.

Even after the pause, several risks stayed in place. Iran still held 440 kilograms of enriched uranium. The strait showed how 100 miles of water could pressure the world economy. Israel said the ceasefire did not cover Lebanon, where attacks continued. Trump stepped back 90 minutes before the stated deadline, raising doubts about "final" ultimatums and their durability.