People gather in a square in Tehran to mourn the death of Iranian Supreme Leader Ayatollah Khamenei, who was killed in a joint attack by the United States and Israel on March 1, 2026.
Atta Kenare | AFP | Getty Images
What you need to know today
President Donald Trump said in a prerecorded Truth Social post Sunday afternoon that he would “avenge” the deaths of three U.S. service members. He added that combat operations in Iran, which began on Saturday, will continue. Early Sunday morning, U.S. Central Command announced the first three U.S. service members killed in the conflict.
Meanwhile, David Silvey, a military history professor at Cornell University, said Iran may “lash out even more” after Supreme Leader Khamenei was killed in a joint U.S.-Israel attack. Retaliatory strikes could include missile attacks on Israeli and U.S. military bases and ships in the Persian Gulf, as well as potential terrorist activities across the Middle East, Europe, and the United States.
If the Strait of Hormuz, an important transportation route for the world’s crude oil through which approximately 13 million barrels per day passes by 2025, remains closed for an extended period of time, an energy shock similar to the one experienced in the 1970s could occur. If Iran closes the Strait, “oil prices could rise into triple digits and LNG prices could retest their 2022 record highs,” said Saul Kavonic, head of energy research at MST Marquee.
U.S. crude oil prices rose more than 7% in the states Sunday evening on concerns about major supply disruptions. “Tankers are starting to build along the Strait of Hormuz, but nothing seems to be going on at the moment. Tankers are definitely spooked,” said Matt Smith, an oil analyst at energy consultancy Kupler.
U.S. futures fell in overnight trading, adding to concerns for investors. This comes amid renewed concerns about the impact of rapid adoption of AI on software companies. The S&P 500 sold off on Friday, ending February in the red.
Airlines canceled hundreds of flights in the Middle East, and some flights were diverted mid-flight as airspace was closed across large swaths of the region due to safety concerns. Air India announced on Saturday that it would suspend all flights to the Middle East and all flights scheduled for Sunday between India, Europe and the United States.
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How an attack on Iran could affect global oil markets and economies
A joint attack by the United States and Israel on OPEC member Iran risks major disruption of oil supplies in the Middle East. The Islamic Republic shares coastline with the Strait of Hormuz, the world’s most important waterway for global oil trade.
“If the Strait of Hormuz remains closed for an extended period of time, a global recession is certain,” McNally said.
“We’re going to see some hoarding, especially by Asian countries that were big importers of oil and gas as they realized that Hormuz Island was blocked,” McNally added. “We’re going to see the mother of all bidding wars.”
