If you have a mortgage, a superannuation account, or a tank to fill up at the servo, the war between the United States and Iran is no longer a distant geopolitical abstraction. It is landing directly in your hip pocket, and the bill is growing by the day.
The joint US-Israeli military campaign against Iran, which began on 28 February with strikes that killed Supreme Leader Ayatollah Ali Khamenei, has sent shockwaves through global financial markets in a way that few conflicts of recent memory have managed. Market watchers are bracing for turbulence after the US confirmed it had launched "major combat operations" in Iran, a move investors say could carry far greater market consequences than the recent run of geopolitical flare-ups.
For Australians, the numbers are already sobering. According to 9News, the ASX 200 was down 1.71 per cent and counting an hour after markets opened on Wednesday, its third straight session of substantial losses. That follows sharp falls on Wall Street, with the Dow Jones, the S&P 500, and the Nasdaq Composite all posting significant declines over two consecutive days.
The raw numbers do not tell the full story, though. The deeper anxiety centres on oil. Iran pumped 4.7 million barrels per day last year, accounting for 4.4 per cent of global oil supplies; the bigger risk, however, centres on the potential for Iran to close off the Strait of Hormuz, where a fifth of all the world's oil passes through on the way to export markets, with analysts estimating any such closure could send prices to $100 a barrel. Iran has already threatened oil tankers in the strait, and the Islamic Revolutionary Guards Corps reportedly warned ships passage was not allowed, while fear of attacks froze ship traffic, with hundreds of tankers carrying oil and liquid natural gas already dropping anchor or sitting stationary near the strait.
In plain English, this means petrol prices are heading up, and if the conflict drags on, they could go up a lot. US crude oil rose more than 8 per cent, or $5.55, to $72.57 a barrel while the global benchmark Brent jumped about 9 per cent, or $6.54, to $79.41, before paring gains. For a country that imports virtually all of its refined petroleum, Australia is particularly exposed to what happens in that narrow waterway between Iran and the Arabian Peninsula.
The financial markets may, in an ironic twist, be the most powerful brake on a further escalation. Bob Savage of the Bank of New York told 9News that markets are only in their early stages of repricing the risk, warning that "there is significant room for global market corrections to continue." Former Goldman Sachs strategist Robin Brooks went further, describing financial markets as the "ultimate constraint" for President Trump, pointing to the disorderly conditions in the Treasury market that led Trump to back down on China tariffs back in April 2025.
That episode gave rise to a term now circulating with dark humour on Wall Street: TACO, which stands for "Trump Always Chickens Out." Many investors have cashed in on the assumption that when markets turn ugly and political opposition mounts, the president finds a more negotiated outcome. According to 9News, the term first came into broad use after Trump delayed many of his so-called Liberation Day tariffs.
Jared Mondschein, Director of Research at the United States Studies Centre, told 9News that while Trump is often cast as someone who goes "maximalist" and never reverses course, the reality is more complicated. "He often comes to a more negotiated outcome or settlement," Mondschein said, adding that Trump has shown sensitivity to Republican opposition and to poor market performance in the past. That said, Mondschein was careful to stress that predicting the president's next move is a "fool's errand."
There is a legitimate counter-argument to the market-panic narrative, and it deserves a fair hearing. Investors have historically remained focused on market fundamentals that are largely unaffected by geopolitical conflict, because conflict traditionally does not go on to materially impact the direction of US corporate profits. Veteran investor Steve Eisman, known for his prescient calls before the 2008 financial crisis, told CNBC he would not change "a single trade" because of the war, saying he views it as potentially a long-term positive for markets. Strategists at Carson Group, examining 40 major geopolitical events over 85 years, found the S&P 500 lost on average 0.9 per cent in the first month following such events, but rose 3.4 per cent across the six months after.
The honest answer is that nobody knows for certain how this plays out. The key variable, as most analysts agree, is duration. Investors are closely monitoring whether the latest move by the US remains a short, concentrated campaign or escalates into a prolonged regional conflict. Trump said Monday the war could last four to five weeks, but could go longer. Iran, meanwhile, has launched retaliatory strikes across nine countries in the region, with the conflict showing few signs of rapid resolution.
For ordinary Australians watching their super balances and fuel receipts, the prudent take is to avoid both panic and complacency. Global markets have absorbed geopolitical shocks before. But the Strait of Hormuz is not just a strategic chokepoint; it is also the pipeline through which a very large chunk of Australia's imported energy flows. If it stays open and the conflict remains contained, the hip-pocket damage may be temporary. If it does not, the Reserve Bank of Australia could find itself dealing with an imported inflation shock at exactly the wrong moment. That is a scenario worth watching closely, even if nobody wants to see it play out.