US-Israeli Strikes on Iran: What Indian market investors need to know;

Crude oil prices are expected to spike if shipments are rerouted away from the Strait of Hormuz.

On February 28, 2026, the United States and Israel launched coordinated airstrikes on Iran, dubbed "Operation Epic Fury" by US officials, targeting military infrastructure, nuclear facilities, and high-level leadership. The strikes resulted in the confirmed death of Iran's Supreme Leader Ayatollah Ali Khamenei, aged 86, marking a significant escalation in longstanding tensions over Iran's nuclear program and regional influence.

US President Donald Trump described the operation as aimed at eliminating "imminent threats" and preventing Iran from acquiring nuclear weapons, while Israeli Prime Minister Benjamin Netanyahu called it a "pre-emptive strike" to neutralize security risks.

Iran has responded with retaliatory missile and drone attacks on Israel and US military bases in Gulf states including Bahrain, Kuwait, Qatar, the UAE, Saudi Arabia, and Iraq, leading to explosions reported in cities like Dubai, Doha, and Manama. As of March 1, 2026, the conflict has entered its second day with ongoing Israeli strikes and Iranian counterattacks, raising fears of a broader regional war.

Timeline of Key Events:

• February 28, 2026 (Early Morning): US and Israeli forces initiate strikes across Iran, hitting over 500 targets including Khamenei's compound in Tehran, nuclear sites, and military bases. Explosions rock Tehran and other cities; Iranian state media reports civilian casualties, including an alleged strike on a girls' school in Minab killing at least 85 people.

  
  

• February 28, 2026 (Midday): President Trump announces the start of "major combat operations" via a video on Truth Social, urging Iranians to overthrow their government. Israel confirms the destruction of Khamenei's residence.

  
  

• February 28, 2026 (Evening): Iran confirms Khamenei's death and declares a 40-day mourning period. Retaliatory strikes begin, targeting Israeli sites and US bases in the Gulf; air raid sirens sound in Israel.

  
  

• March 1, 2026 (Ongoing): Additional US-Israeli strikes reported; Iran launches fresh waves of missiles. Iranian Parliament Speaker Mohammad Bagher Ghalibaf vows "devastating blows," while a transitional council assumes leadership duties.

  
  

Casualties and Targets:

Iranian reports indicate over 200 deaths and 700 injuries from the initial strikes, including senior officials like the Islamic Revolutionary Guards Corps chief. US and Israeli forces focused on ballistic missile programs, nuclear enrichment sites, and leadership compounds, with claims of killing around 40 high-ranking Iranian officials. Iranian counterstrikes have caused undetermined casualties in targeted Gulf cities, with Bahrain reporting a missile hit on a US navy headquarters. No confirmed US or Israeli fatalities yet, but air defenses in Israel and the Gulf have intercepted many incoming projectiles.

International Reactions:

Russia condemned the strikes as an "unprovoked act of armed aggression" and demanded an immediate halt. French President Emmanuel Macron warned of "grave consequences for international peace." Protests erupted in Pakistan and other Muslim-majority countries against the US-Israel actions. China and Russia are expected to provide diplomatic support to Iran, potentially blocking UN Security Council resolutions, while the US has deployed additional carrier strike groups to the region. Social media is flooded with memes and speculation about World War 3, reflecting public anxiety.

Economic Impacts and Sector Disruptions:

• Energy Sector: The conflict threatens the Strait of Hormuz, through which 20% of global oil and 60% of India's LNG imports pass. Potential blockades or rerouting via Africa could spike crude prices to $100 per barrel, exacerbating inflation and energy costs worldwide. Iran's retaliatory strikes on Gulf states could disrupt oil production in Saudi Arabia and the UAE, leading to immediate supply shortages.

  
  

• Global Markets: Stock indices are bracing for volatility; Indian markets (Sensex and Nifty50) may open lower on March 2, 2026, due to knee-jerk reactions. Recent US tariff threats and AI valuation concerns compound this, with potential relief rallies if de-escalation occurs.

  
  

• Supply Chain Disruptions: Rerouting shipping could delay global trade, affecting commodities like oil, gas, and fertilizers. For India, 50% of crude imports are at risk, impacting refining, transportation, and manufacturing sectors. Broader effects include higher insurance premiums for Middle East shipping and potential food price hikes if agricultural exports from the region falter.

  
  

• Other Sectors: Aviation faces risks from airspace closures; technology and defense stocks may surge due to increased military spending, while tourism in the Gulf plummets amid security concerns.

  
  

Probability of Escalation to World War 3:

Experts assess the risk of a full-scale World War 3 as low (under 10-20%), viewing this as more likely to remain a regional conflict despite great-power involvement. The US backs Israel, while Russia and China support Iran diplomatically but are unlikely to engage militarily, preferring to avoid direct confrontation. However, accidental escalations—such as strikes on Russian assets in the Gulf or Iranian attacks on US carriers—could raise the probability to 30-50% if not contained quickly. Iran's nuclear ambitions and internal instability (e.g., water crises and economic woes) add volatility, but major powers have incentives to de-escalate. Public sentiment online amplifies fears, but analysts emphasize that historical precedents like past US-Iran tensions did not lead to global war.

Potential Future Developments:

The US has indicated strikes could continue for days, aiming for regime change. Iran's transitional leadership may seek negotiations or further retaliation, potentially involving proxies like Hezbollah. Global calls for UN intervention grow, with oil markets to watch closely. Investors are advised to monitor de-escalation signals and consult advisors amid volatility.