The United States and Israel launched coordinated strikes on Iran on Feb. 28, 2026, with President Donald Trump saying the operation aimed to destroy Iran’s nuclear program and weaken the current regime.
The attacks prompted immediate retaliation from Iran and raised fears of a broader regional conflict with significant implications for global oil markets. Early reports from Reuters, Axios, and CNN, citing U.S. government sources, said Iran’s Supreme Leader Ayatollah Ali Khamenei was killed in the strikes, though details remain limited, as quoted on Yahoo Finance.
Retaliation Expands Across the Gulf
Iran responded quickly, launching missiles toward U.S. military assets and infrastructure across the Gulf region, including locations in Bahrain, the United Arab Emirates and Qatar. Reports also indicated strikes targeting facilities linked to Saudi Arabia. The escalation followed failed last-minute nuclear negotiations mediated by Oman.
Oil Markets Brace for Sharp Volatility
Iran produces roughly 3.4 million barrels per day, making up about 4% of the world's oil supply, and exports roughly 1 million to 2 million barrels per day, according to Kpler, with most of those sanctioned shipments going to China, as quoted on Yahoo Finance.
Oil prices had already risen ahead of the escalation. According to Rystad Energy’s Jorge León warns prices could jump $10–$20 per barrel when markets reopen if tensions show no signs of easing, as quoted on the same Yahoo Finance article.
Strait of Hormuz Risks Dominate Outlook
Market attention has shifted to the Strait of Hormuz, a vital chokepoint through which roughly one-fifth of global oil and liquefied natural gas supplies pass daily. About 13 million barrels per day moved through it in 2025, equal to about 31% of all seaborne oil flows, Kpler data showed, as quoted on CNBC.
Iranian forces reportedly warned vessels against transiting the strait, as mentioned in the above-said Yahoo Finance article. Although a full closure is viewed as unlikely, any disruption could shoot up shipping costs and energy prices.
OPEC+ Agrees for Only a Modest Output Hike
Note that despite Iran tensions, OPEC+ agreed to resume an oil output hike at a slightly accelerated pace. Key members led by Saudi Arabia and Russia — which had paused a series of hikes during the first quarter — will add 206,000 barrels a day in April, according to a statement after their monthly video conference on Sunday, per Bloomberg, as quoted on Yahoo Finance. The hike is just 1.5 times larger than the 137,000-barrel increments made by the group in December. With no meaningful supply increase, the latest Iran crisis may thus boost oil prices materially.
Leveraged Oil & Energy ETFs in Focus
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Direxion Daily Energy Bull 2X Shares (ERX): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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