US-Iran clashes lift oil past $90, rattling global markets

Wall Street opened September under a cloud of geopolitical risk after renewed US-Iran military exchanges near the Strait of Hormuz sent oil prices surging, lifted bond yields and jolted equity markets on Monday. The CBOE Volatility Index rose sharply during the session, opening at 15.24 and touching an intraday high of 15.48, before settling at 14.92 — up from Friday's close of 14.43. The S&P 500 slipped about 0.3% to 7,686, while the Dow Jones Industrial Average fell 0.7% to 53,186.schwab+2

Brent crude futures settled at $90.80 a barrel on August 31, up 3.06% on the day, according to Vantage Markets. Yahoo Finance Alphabet Inc. ↗ 1.59% reported that Brent pushed to an intraday high above $91. The move came after the US and Iran exchanged fire for the first time in roughly a month, reigniting fears of supply disruptions through the Strait of Hormuz, a chokepoint for global energy exports.finance.yahoo+1

Rate Fears Compound the Pressure

The geopolitical shock landed on markets already rattled by hawkish signals from Federal Reserve Chairman Kevin Warsh. In his Jackson Hole speech on August 29, Warsh warned that "underlying trends" in inflation had not improved, with PCE inflation still at 3.7%, well above the Fed's 2% target. The remarks pushed rate-hike expectations sharply higher: CME data showed a 60% probability of a September increase, up from 35% before the speech.reuters+2

The 10-year Treasury yield rose to 4.75% on August 31, up from 4.73% the prior session. The 30-year yield climbed to 5.243%, its highest since early 2025. Decliners outnumbered advancers on the New York Stock Exchange by nearly 2-to-1, and the Nasdaq Composite shed 0.1%.moomoo+2

Ripple Effects Reach Emerging Markets

The turbulence spilled into Asian trading on September 1. India VIX rose to 11.78 at the close, up roughly 5.3% from the prior session, after swinging between 9.24 and 12.12 intraday. India's Nifty 50 slipped below 24,000 as Brent crude held above $90, raising concerns about the country's import bill, inflation trajectory and corporate margins. Japan's 10-year government bond yield touched 3%, its highest since 1996.hdfcsky

The escalation marks the latest chapter in a conflict that began in late February 2026 and has kept energy markets on edge for six months. A ceasefire signed in June collapsed in mid-August, and Brent crude has now gained roughly 5.4% over the past five trading sessions. With the historically volatile September-October period ahead and US midterm elections approaching in November, Chris Iggo, chief investment officer for AXA IM Core Investments, warned that bond market strain could "start to push credit spreads wider and impact equity market valuations".tradingview+1