Global markets are reeling from escalating geopolitical tensions in the Middle East, as Iran's Revolutionary Guard issued a warning against ships entering the region. The death of Supreme Leader Ayatollah Khamenei has destabilized diplomatic norms, causing crude oil prices to surge sharply. European equities have plummeted, with the S&P 500 futures trading at their lowest levels in months. The Federal Reserve's policy outlook is shifting as investors reassess risk appetite amid fears of prolonged regional conflict. The energy shock is creating a ripple effect across asset classes. Crude prices have risen over 8% in a single session, testing /barrel levels, while equities face renewed selling pressure. Traders are now pricing in a higher probability of a Fed rate cut in Q2, with the Fed Funds futures market showing a 65% chance of a 25-basis-point cut by June. This shift reflects both immediate energy concerns and broader economic slowdown signals. For markets, the key risks include potential supply disruptions in the Strait of Hormuz and cascading inflationary pressures. Gulf investors should monitor OPEC+ policy responses and Iran's next moves. The U.S. dollar is under pressure against the euro as risk-off sentiment dominates, while gold has surged as a safe-haven asset. Traders should watch for central bank interventions and real-time updates on Middle East tensions.

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