Geopolitical Conflict and Financial Market Reactions: Evidence from the 2026 US–Israel–Iran Crisis

The worldwide financial markets experience abrupt disruptions because geopolitical conflicts create disturbances in commodity supply, investor expectations, and macroeconomic stability. This study analyses the financial market impact of the conflict involving the United States, Israel, and Iran by examining movements in oil prices, gold prices, and US 2-year Treasury bond yields. The dataset covers the period from February to April 2026 and is divided into a pre-war period (before 28th February 2026) and a war period (after 28th February 2026) to identify structural market changes following the outbreak of the conflict. The results show that oil prices experienced the strongest reaction, increasing from USD 71.23 per barrel on 2nd March 2026 (being the first working day after the war) to USD 111.54 per barrel by 2nd April 2026, representing an increase of approximately 57 %. This sharp rise reflects investor concerns about potential supply disruptions in the Middle East and the strategic importance of global shipping routes such as the Strait of Hormuz. In contrast, gold prices declined during the same period, falling from USD 5,294.40 per ounce on 2nd March 2026 to USD 4,651.50 per ounce by 2nd April 2026, indicating a partial shift of investor capital from safe-haven assets toward commodities offering higher short-term returns, including crude oil. The decline may also have been influenced by increased gold sales from central banks, including the Turkish central bank. The analysis of US 2-year Treasury yields shows an increase from 3.49 % to 3.80 % during the war period, indicating reduced demand for government bonds because investors became increasingly concerned about inflationary pressures and expanding wartime fiscal expenditures. The findings indicate that oil prices exhibited the strongest market performance during the conflict period because of heightened geopolitical risk and anticipated supply disruptions. The findings prove that geopolitical conflicts create major effects on financial markets because investors behave and drive capital investments away from the conflict-related assets, which include energy commodities.