U.S. forces launched a second wave of strikes against Iran on Tuesday, retaliating for the downing of a military helicopter and putting a precarious truce under fresh strain. President Donald Trump promised further attacks, declaring the operations "self-defense strikes" that sent shockwaves through global markets.
The renewed hostilities shattered optimism that a deal to end the war was imminent, a prospect Trump himself had dangled earlier this week. Kuwait closed its airspace, while Israel warned of possible launches from Lebanon, widening the regional fallout.
Gold slumped for a third straight day, falling below $4,200 as investors fled to cash, while the Dow Jones Industrial Average shed more than 900 points in a broad sell-off led by chip stocks. Crude oil prices surged as supply concerns mounted across the Middle East.
The intensifying conflict raises inflation risks just as central banks were beginning to ease policy. Longer-term, a protracted war could disrupt energy corridors and deepen volatility in commodities and currencies.
"Each escalation erases the diplomatic progress made," said a senior Gulf official, speaking on condition of anonymity. "The economic aftershocks may outlast the fighting."