China has denounced coordinated US-Israel airstrikes on Iranian military targets, warning of destabilizing regional consequences. The attack has triggered sharp market reactions, with Brent crude surging past $98 per barrel and the VIX spiking to 34.2, signaling heightened risk aversion and a flight to safety in energy and defense stocks.
- Brent crude (CL=F) rose to $98.42 per barrel following US-Israel strikes on Iran
- VIX index surged to 34.2, its highest since October 2024, reflecting market volatility
- Energy ETF (XLE) gained 3.8%, driven by risk-on demand in oil and gas stocks
- Defense stocks, including Lockheed Martin and Raytheon, saw 3.6–4.1% gains
- China formally condemned the strikes, calling them a threat to regional and global stability
- Iran vowed retaliation, raising fears of supply disruptions in the Strait of Hormuz
A coordinated military operation by the United States and Israel against Iranian defense installations on March 1, 2026, has drawn strong condemnation from Beijing, which called the strikes a violation of international law and a threat to global stability. The attacks targeted facilities near Isfahan and Bandar Abbas, according to intelligence assessments, prompting Iran to issue a formal statement vowing retaliation in due course. The escalation has significantly increased concerns over potential disruption to global energy flows, particularly through the Strait of Hormuz. As a result, Brent crude futures (CL=F) rose to $98.42 per barrel by midday on March 2, marking a 5.7% increase over the previous session. This surge reflects a growing market perception of supply risk, with traders pricing in potential disruptions to Iranian exports and retaliatory actions against shipping lanes. Financial markets responded sharply, with the CBOE Volatility Index (^VIX) climbing to 34.2—the highest level since October 2024—indicating heightened investor anxiety. The energy sector (XLE) posted a 3.8% gain, as investors favored defensive exposures in oil and gas firms with exposure to volatile regions. Defense stocks also saw momentum, with Lockheed Martin and Raytheon Technologies reporting increased trading volume and a 4.1% and 3.6% rise, respectively, on expectations of expanded military spending. The geopolitical flashpoint underscores the fragility of energy markets amid regional instability. With China, the world’s largest oil importer, emphasizing diplomatic de-escalation, the international community faces mounting pressure to prevent a broader conflict. The situation remains fluid, with oil and risk-sensitive assets likely to remain under pressure until clarity emerges on Iran’s next moves.