The Impact of the Iran War on the Market

March 8, 2026

By Robert Wiedemer

The Iran War has clearly become topic #1 for the stock market and for the nation.  Hence, I thought I would weigh in with my thoughts on the war and where the market and the war might be heading.

Focus on Two Key Issues

In analyzing the impact of the Iran War on the stock market, there are two key issues:

1)    A general uprising that overthrows the current government -- regime change

 2)    The battle to disrupt oil tanker shipping through the Strait of Hormuz

 A General Uprising that Overthrows Iran’s Government

This is important because the only way that regime change can occur in Iran is through a general uprising to change/overthrow the current government, much like what happened when the Shah was overthrown in 1979. 

I don’t think the government is going to collapse on its own.  They will simply replace anyone who is killed with another person.  Already, it appears that the leading contender to replace the Supreme Leader, Ali Khamenei, is his son, Mojtaba Khamenei.  He is viewed as a hard-liner in terms of his relations with the US.

I feel it is unlikely that the Kurdish militia which President Trump is supporting has any real military chance to defeat the Iranian military. More likely, they will fight to create a Kurdish homeland in Iran as they tried to do in Iraq.  That may or may not succeed, but it would not be a threat to the central government.

So far, in everything that I have read, there have been no attempts at a popular uprising.  There was a gathering of several hundred thousand people in Tehran to mourn the death of Ali Khamenei, but that’s about it.

Without internal regime change, the war with Iran has no obvious quick end.  That is the stated goal of the administration.  However, it’s pretty clear that the US is not going to send large numbers of troops into Iran to attempt an external regime change so it will need to be internal and, at least for now, that’s simply not happening.

The Battle to Disrupt Oil Tanker Shipping Though the Strait of Hormuz

For the stock market, and possibly for the war itself, this is the only military operation that matters.  At this point, the rest is pretty much just noise.  If the US cannot open the Strait of Hormuz to oil tanker shipping, the price of oil will go higher and stay higher.  That’s the big problem bothering the stock market and eventually, the world’s economy.  About 20% of the world’s oil passes through the Strait of Hormuz. 

The Strait is currently closed to all shipping.  The price of oil has soared from $65 to $90 per barrel in just a few days. It will certainly go higher the longer the Strait is closed. 

Opening it may not be easy.  President Trump’s plan of offering naval escorts and insurance will take time to implement and effectiveness is not guaranteed.  As a few observers have pointed out, the Navy had significant trouble in knocking out Houthi attacks on shipping in the Red Sea last year.  In fact, they never really succeeded in completely eliminating the threat.  It’s difficult. 

Also, Iran is more sophisticated than the Houthis and will likely be able to maintain a continuous series of attacks using drones and missiles on any ships that traverse the very narrow Strait on Iran’s border.  Iran’s Navy is irrelevant in this operation.  It’s all about missiles and drones.  Plus, the Iranians probably have or can quickly develop the type of water-based drones that have caused the Russian navy, and its oil tankers, so many problems in the Ukraine war. 

So far, little of Iran’s ship to ship missiles and drones in that area been needed since tankers have simply stopped moving through the Strait of Hormuz due the potential hazards.

Simply put, as long as the Strait of Hormuz remains shut, the Iran war will impact oil prices, the world economy and the US stock market.  So, we need that waterway open for the market to truly settle down. 

I feel that opening the Strait of Hormuz to the free flow of shipping will be difficult and take time.  Our recent experience with the Houthis in Yemen amplifies my concerns.

 So, When Will This War End and Take Pressure off the Stock Market?

Clearly, it would end with a general uprising leading to regime change that gets President Trump’s approval.  That would quickly open the Strait of Hormuz. 

It would also end if we can open the Strait of Hormuz to oil tanker shipping militarily.

Another possibility is that the Iranians agree to open the Strait if the US and Israel stop their bombing campaign.    Obviously, President Trump would not like this option.  However, he probably won’t like the option of continued high and rising oil prices either.  Plus, after a while, all the obvious targets in Iran will have been bombed so it’s not clear what we would be doing after that since there are no plans to put in large numbers of ground troops.

So, he may just declare a massive victory and quit bombing to open up the Strait of Hormuz. I can’t imagine they are discussing this option now but depending on how quickly they can open the Strait with military force, or how quickly he can get create a uprising, this may become an increasingly attractive option. 

Trading Though This Environment and Final Thoughts

For my Bull Bear Investment clients, I have made my first trade, and more may come depending on the situation.  As I said when I made the trade, war doesn’t always go as planned so I am always ready to make further adjustments.

Overall, I am skeptical that we are winning the hearts and minds of the Iranians enough for them to overthrow the government and then ask for (and take) President Trump’s advice on who should be their next leader.  Iran is a fairly religious country made up almost entirely of Muslims.  Killing one of their top Muslim leaders may not make them love the US and, in fact, may unify dislike of the US. 

Sure, we can simply tell them that a lot of Jews in Israel are happy they killed Khamenei and a lot of Catholics and Protestants in the US are happy we helped Israel kill Khamenei so why aren’t most Muslims in Iran happy we helped Israel kill Khamenei?  That may sound like a winning sales pitch to some in the US and Israel, but I wouldn’t want to push that argument too hard if I were in Iran. 

But, who knows, maybe Iranians just need some time and more bombing to think about it and then they will come around to our view.  Or maybe we can keep the Strait of Hormuz open to shipping with our massive military force.  Either way works for the stock market. 

However, sometimes the easiest way to win is to simply declare a massive victory and end the war.