When a conflict opens in the Middle East, the first question every desk asks is what happens to oil. It is the right question and it is nowhere near sufficient, because the same shock that lifts one set of prices compresses margins across a much wider set of businesses.
The war began on 28 February 2026, and the Strait of Hormuz closed with it. What follows is an account of how markets repriced in the first weeks, from those opening days through the truce of 8 April and the months since: who gained, who paid, and which of those moves the pattern of past wars suggests will last. It is a reading of the opening phase, not a closed chapter. The truce collapsed on 8 July and hostilities resumed in the first days of September, so some of the prices below have moved again since.
The sectors that gained
Energy production. The most immediate beneficiary, and the most mechanical. Once a conflict puts Gulf shipping lanes in question, the market prices the risk of scarcity straight away, and crude grades destined for Europe and Asia moved sharply. Producers selling from outside the affected region captured higher prices without the operational disruption. That was the cleanest version of the trade.
North American energy supply chains. Reuters found Asia and Europe more exposed than the United States, now a net exporter of energy, in the same piece that put the odds of a US recession at 30%. That is relative rather than absolute insulation, but it put operators tied to North American energy in a less exposed position than competitors dependent on Gulf flows.
One whole market. If there was an outright winner it was not a sector but a country: Korea's KOSPI was up 51.59% for the year by 21 April, against 3.85% for the S&P 500. Whatever share of that belongs to the war and whatever belongs to chips and shipbuilding, it is a reminder that a conflict is never the only thing an index is pricing.
The sector the market had already priced
Defense is the textbook beneficiary: instability raises procurement, stockpile replenishment and maritime security spending, order books lengthen, and equity markets price the announcements immediately. It worked for a day. On 2 March the three biggest moves among US contractors were gains of 6%, 4.7% and 3.3%. Over the rest of March the Arca Defense index gave back about 8%, European defense names lost around 11%, and Rheinmetall finished the period down 31% for the year.
The explanation is that the boom had already happened. Defense had been the trade of 2025, on rearmament budgets announced long before any Iranian missile flew, and the sector went into the war carrying a premium that the war could only confirm, not add to. A shock that everyone has been positioned for is not a shock in price terms: the buyers were already in, so the first news was a reason to take profit. When a sector is the obvious beneficiary of an event, the question to ask is how much of the benefit was bought in advance.
The sectors that paid
The losing side of the ledger is considerably wider.
Shipping and logistics first. With the Strait of Hormuz closed, around 2,000 vessels were left stuck and transits fell by 95%. The ECB put the supply at stake at about 11% of the world's oil, a bigger share than the 1973 or 1979 shocks took out individually. War-risk insurance, which had cost 0.125% to 0.25% of a hull's value before the war, went to around 5% by April and to 7.5% to 10% by July; transit times, risk surcharges and operational uncertainty rose with it.
This time the strait did close. The lesson of earlier episodes is that it does not have to: it is enough for the market to treat the passage as unreliable. Insurers reprice, charterers reroute, and costs rise through every link in the chain. That is why a regional conflict reaches goods, raw materials, semi-finished components and perishables that have nothing to do with oil.
Energy-intensive and thin-margin industries next. Manufacturing, chemicals, fertilizers, air transport, food processing and consumer goods. European companies were flagging cost pressure, shipping delays and earnings risk within weeks. Lactalis, among others, pointed to higher energy, packaging and transport costs alongside logistics problems affecting perishable goods.
These businesses do not benefit from disruption. They absorb it, and whether they survive it intact depends entirely on whether they can pass the cost on.
Airlines and tourism. Fuel is one of the largest line items in an airline's cost base, and conflict simultaneously raises it, complicates routing, and dampens the consumer confidence that fills the seats. Markets price the cost increase and the demand risk at the same time, which is why the sector tends to fall harder than the fuel move alone would justify.
Energy-importing economies. The least discussed loser and the one that matters most for currency traders, though not the one the headline numbers point to. The IMF's April update found the hardest hit fell on the Gulf exporters, whose growth was revised down by as much as 15 points because they could not ship their oil, while the region's oil importers were revised down by only 0.3 points and were still growing around 3.8%. The damage to importers is slower and comes through other channels: the Fund's regional director, Jihad Azour, pointed to higher energy costs, weaker remittances from the Gulf and tighter financial conditions.
For foreign exchange this is direct. Currencies of fragile, energy-dependent economies weaken when the import bill rises, inflation accelerates, and the external balance deteriorates. An oil shock is a terms-of-trade shock, and terms of trade is one of the more reliable long-horizon drivers of an exchange rate.
How this compares with previous oil shocks
The pattern is old enough to have a track record, and the track record contains a warning.
1973. The OPEC embargo quadrupled crude prices and produced the stagflation of the decade that followed: high inflation with weak growth, the combination central banks are least equipped to handle.
1979 to 1980. The Iranian revolution and the war that followed cut supply again, pushing inflation into double digits across the developed world and forcing the interest rate response that caused the 1981 recession.
1990. Iraq invaded Kuwait and oil roughly doubled in two months. Then the coalition campaign began in January 1991 and prices collapsed almost immediately, because what the market had been pricing was the uncertainty rather than the fighting. Traders who bought the invasion and held through the war lost money in a conflict that went exactly as they expected.
2022. The invasion of Ukraine hit European energy hardest, and the currency followed: the euro fell to parity with the dollar for the first time in twenty years, driven substantially by the terms-of-trade shock rather than by rate differentials alone.
Two conclusions come out of that sequence. The energy price move is usually front-loaded, because markets price uncertainty rather than events, but a closed strait is an event, and this conflict shows the exception: Brent's high, $126.41, came on 30 April, after the truce and two months into the war, while the physical shortage was still being felt. And the durable effect is macroeconomic rather than sectoral: what outlasts the headlines is what the shock did to inflation, to policy, and to the currencies of countries that had to pay more for their imports.
Three things the episode confirmed
"War raises oil" is not a trade. It is a starting assumption that needs a second question attached: who can pass the cost on and who cannot. Distinguishing an immediate benefit from a durable one is most of the work.
An energy name can rally hard on the initial shock and retrace just as hard once the market starts pricing negotiations, a ceasefire, or partial reopening of routes. Crude itself moved lower on several occasions when diplomatic contact was reported, despite the underlying situation being unchanged. What is being priced is the probability distribution, and that moves on headlines.
Read sectors before individual names. In a geopolitical shock, capital moves on macro logic. Energy, defense and haven assets attract flow; discretionary consumption, transport, aviation and energy-intensive industry lose it. Starting from the sector avoids the error of buying a company whose own infrastructure sits inside the conflict zone.
A stock market gain is not an economic gain. When a sector rises because input costs have risen, that is not a sign of health anywhere. It is frequently the opposite: certain equities gain because the system as a whole has become more fragile, and reading the rally as good news inverts the signal.
What to carry forward
Conflicts in this region follow a recognizable transmission chain: supply risk to energy prices, energy prices to inflation, inflation to rate expectations, rate expectations to currencies and equity valuations. The chain is more durable than any individual episode. In the 2026 Iran war markets did what they usually do in the region's conflicts: they priced the uncertainty first, the physical shortage second, and the sector that everyone expected to win had already been bought.
The mechanics of that chain, and which sectors sit on each side of it, are worth understanding independently of any particular war: they are set out in which sectors gain when war hits the Middle East.
The practical discipline during an active conflict is duller than the headlines suggest. Reduce leverage, because news arrives when markets are closed and gaps make stop losses unreliable. Do not chase a move that has already run, because de-escalation is as sudden as escalation and it arrives without warning. And keep asking which specific thing the market is pricing today: supply disruption, military spending, a scramble for liquidity, inflation, or the possibility that it all ends next week.
