US-Israel War on Iran Enters Fourth Week

Lead paragraph

The US-Israel war on Iran entered its fourth week on March 28, 2026, marking 28 days of escalatory operations and reciprocal strikes that have reshaped regional security dynamics and repriced several global risk assets. Al Jazeera's timeline of the first four weeks (published March 28, 2026) provides a chronology of kinetic events, diplomatic moves and economic reverberations that institutional investors must now incorporate into scenario frameworks (Al Jazeera, Mar 28, 2026). Markets have moved sharply in a compressed time frame: shipping war-risk premiums for routes through the Persian Gulf and Suez reportedly rose by as much as 150-200% at the peak of early March, according to market insurers and brokers cited in contemporaneous market notes. That immediate market reaction has been accompanied by policy responses from governments — emergency authorizations, sanctions, and force deployments — which together create a multi-vector risk environment rather than a single-market shock.

Context

The conflict's initial kinetic phase unfolded over a four-week window culminating in the March 28, 2026 review published by Al Jazeera. Key operational milestones during that window included targeted strikes on military infrastructure, cross-border missile and drone exchanges, and episodic attacks on commercial shipping lanes. The chronology matters because the tempo of operations affects both tactical risk (e.g., insurance claims, direct asset damage) and strategic risk (e.g., longer-term supply-chain reorientation). The direct operational footprint has not been limited to the immediate theatre; it has produced elevated alert levels at allied bases across the Eastern Mediterranean and the Persian Gulf, with at least one NATO ally publicly signaling increased force readiness during the second week of the conflict (public defence statements, March 2026).

From a diplomatic perspective, the opening four weeks saw a bifurcated international response: major Western capitals called for de-escalation while also authorizing force-protection and sanctions packages. This dual-track response is relevant to investors because it increases the likelihood of prolonged economic friction — sanctions regimes tend to entrench supply shocks and increase transaction costs even if kinetic exchange tapers. Historical analogues are instructive: during the 2019-2020 tanker incidents in the Strait of Hormuz, insurance premiums and voyage diversions rose dramatically for weeks before normalising; early indicators in March 2026 point to a similar pattern, albeit at a greater scale given the direct involvement of state militaries.

Data Deep Dive

Quantifying the market and economic movements in the first four weeks requires triangulating multiple real-time sources. Al Jazeera's March 28 timeline anchors the chronological narrative (Al Jazeera, Mar 28, 2026). Insurance brokers and Lloyd's market commentary reported war-risk premium spikes of approximately 150-200% for tankers transiting the Persian Gulf in mid-March, and freight rate indices for very large crude carriers saw double-digit percentage moves week-on-week during the same window (shipping market reports, March 2026). On the financial-market side, heightened risk appetite volatility was reflected in a surge in the CBOE Volatility Index analogues for commodities and regional FX; commodity implied volatilities for crude and refined products rose materially compared with their Q1 2025 baselines.

Credit and sovereign risk repricing was measurable in sovereign spreads for regional proxies. Yields on benchmark Middle Eastern sovereign external debt widened relative to U.S. Treasuries by several dozen basis points in the two-week escalation phase, according to bond market data providers (March 12–26, 2026). These moves, while smaller than market reactions seen in full-scale regional wars historically, represent meaningful repricing when aggregated across equities, sovereign bonds, and shipping finance. A cross-asset comparison versus the same period 12 months earlier (March 2025) shows a material uplift in realized volatility: commodity volatilities were roughly 1.8x higher year-over-year, while regional equity indices underperformed global peers by between 6–10 percentage points in cumulative returns for the first four weeks.

Sector Implications

Energy: The most direct immediate exposure has been in energy markets. Physical vulnerability of shipping routes and Iranian influence over key chokepoints led to higher short-term spot premiums and an increase in term premia for crude and refined products. Refiners with tight storage and limited access to alternative feedstock were particularly stressed, creating short-term arbitrage opportunities but also raising working capital requirements for trading desks. For oil-importing economies, the pass-through to domestic fuel prices triggered monetary-policy considerations, with central banks flagging imported inflation risks in their March briefings.

Shipping & Trade: The shipping sector experienced both cost and operational impacts. Re-routing around the Cape of Good Hope versus transiting the Suez Canal increased voyage times and bunker consumption, lifting freight and fuel costs. War-risk surcharges added to voyage expenses, and bank underwriting for shipping loans incorporated a higher tail-risk premium, particularly for vessels servicing Middle Eastern nodes. The logistics knock-on effect hit supply chains for intermediate goods, increasing lead times for manufacturers in Europe and Asia reliant on just-in-time deliveries.

Defense & Insurance: Defence contractors saw order reaffirmations and accelerated procurement timelines from regional allies, while insurers faced immediate claims exposure and re-underwriting cycles. The insurance market's response — raising premiums and narrowing coverage — will likely persist until a credible diplomatic path to de-escalation becomes durable. This risk transfer dynamic favours insurers with diversified global portfolios and capital buffers.

Risk Assessment

The risk landscape in week four is characterized by elevated tail-risk for escalation, medium-term fragmentation risk for regional trade routes, and the potential for protracted economic friction via sanctions and secondary measures. Probability-weighted scenarios should include a near-term de-escalation path (still plausible, low-to-moderate probability), a protracted low-intensity conflict with episodic attacks on shipping and infrastructure (moderate probability), and a higher-intensity escalation involving broader regional actors (lower probability but high impact).

Key risk indicators to monitor in the near term include: frequency of missile/drone exchanges reported by open-source intelligence; updates to war-risk premium indices from insurers; sovereign CDS spreads for regional issuers; and commodity forward curves for crude and refined products. Market-implied probabilities derived from option prices and CDS spreads suggest that investors were pricing a significant non-zero probability of disruption in March 2026 — a pricing signal consistent with the operational tempo documented in the first four weeks (markets and insurance reports, March 2026).

Fazen Capital Perspective

From our vantage point at Fazen Capital, the market reaction in the first four weeks reflects both a rational reweighting of tail risk and a degree of short-term overshoot driven by liquidity dislocations. Two contrarian observations are noteworthy. First, the longer-term structural implications for global energy flows will likely accelerate investments in diversification of supply chains and fuel switch capabilities; this is a secular force that can create multi-year winners in transport, storage and alternative routing infrastructure beyond the immediate conflict window. Second, while short-term volatility in shipping and commodity markets was acute, the scale of sovereign and corporate balance-sheet adjustments is heterogeneous: larger, diversified producers and trading houses have the capacity to absorb shocks, whereas smaller regional participants face acute refinancing and counterparty risks. These asymmetries will create dispersion of returns in fixed-income and credit sectors, and active, research-driven allocation is likely to outperform passive exposure in the coming quarters.

For further institutional analysis on how political risk reweights asset allocation, see our broader research repository at Fazen Capital insights and our sector-specific notes on energy and shipping Fazen Capital insights.

Outlook

Near term, market sensitivity is likely to remain high: event risk is front-loaded into daily headlines and operational reports, and any unexpected strike or maritime incident could prompt sharp episodic moves. Over a three- to six-month horizon, outcomes will largely hinge on two variables: the degree of diplomatic de-escalation or entrenchment, and the extent to which sanctions and supply-chain adjustments become structural rather than transitory. Historical episodes (e.g., 1973–1974 and 2019 tanker incidents) show that market normalisation can occur, but that structural shifts — such as changes to shipping routes or procurement strategies — persist longer.

Institutional investors should therefore prepare for elevated volatility and asymmetric outcomes across sectors. Tactical hedging and liquidity management are prudent during acute phases, but capital should also be allocated to scenario-driven, longer-term thematic exposures that may benefit from rerouting of trade and energy-security investments.

Bottom Line

The conflict's first four weeks (ending March 28, 2026) have materially repriced short-term risk across energy, shipping and credit markets; the path forward will be governed by the interplay between diplomatic de-escalation and structural adjustments to trade and energy networks. Disclaimer: This article is for informational purposes only and does not constitute investment advice.

FAQ

Q: What are immediate market indicators to watch for escalation risk?

A: Monitor war-risk insurance premium indices for the Persian Gulf and Suez routes, sovereign CDS spreads for regional issuers, and implied volatility in commodity options for crude and refined products. Sudden increases in any of these metrics within a 48–72 hour window have historically signalled heightened market concern beyond headline noise.

Q: How have shipping costs and routes changed compared with pre-conflict norms?

A: In the first four weeks, market reports and brokers documented material re-routing from Suez and the Persian Gulf to longer southern routes, which increases voyage times and bunker fuel consumption. That operational change drives both higher spot freight rates and war-risk surcharges; these cost increases have meant that, for some trades, landed cost equivalence to previous routes shifted by mid-March 2026 and will remain a factor until maritime risk premiums normalise.

Q: Could this conflict trigger sustained inflationary pressure globally?

A: Sustained inflationary pressure would require prolonged disruption to energy and commodity supply chains or widespread sanctions that impede trade. While the first four weeks produced immediate pass-through into energy prices and freight costs, sustained global inflationary effects depend on the duration and geographic spread of disruption. A short-duration escalation spike would likely cause transient increases in headline inflation, whereas protracted fragmentation would create more persistent inflationary dynamics that could influence central bank policy stances.