Trump’s Iran Escalation Threatens Global Markets, Boosting Oil and Defense Stocks

A renewed U.S.-Iran conflict under a Trump administration would likely destabilize global energy markets, with crude oil futures (CL=F) expected to surge above $120 per barrel amid supply disruption fears. The Strait of Hormuz, a critical maritime chokepoint, could become a flashpoint, raising the risk of supply shocks that would directly impact global refining margins and energy importers, including Australia. Historical precedents show oil spikes of 30% to 50% during past Iran-related crises, suggesting a similar pattern could unfold in 2026. Defense stocks would also stand to benefit, with Lockheed Martin (LMT) poised to gain from increased Pentagon procurement and foreign military sales. A conflict scenario could accelerate arms exports to allies, particularly in the Indo-Pacific, where Australia is expanding its defense posture. LMT’s contract pipeline, already exceeding $100 billion in active and awarded projects, may expand further if Washington seeks to bolster regional deterrence. Energy majors like ExxonMobil (XOM) would face mixed outcomes: while higher oil prices could boost near-term earnings, the volatility could complicate long-term planning and capital allocation. XOM’s 2026 guidance assumes stable oil markets, but a sudden escalation could force a reevaluation of investment strategies and risk hedging. Meanwhile, safe-haven demand could lift gold and U.S. Treasury yields, pressuring equity markets outside the defense and energy sectors. Australia, heavily reliant on energy imports and increasingly aligned with U.S. defense initiatives, would face strategic choices. Its defense budget, already projected to grow to AUD 125 billion by 2027, could see accelerated spending on missile defense and intelligence capabilities. The potential for disrupted shipping lanes may also prompt Australia to diversify energy procurement, increasing LNG imports from the U.S. and Qatar.