NEW YORK, March 2, 2026, 14:38 EST
The Cboe Volatility Index jumped 1.45 points to 21.31 on Monday, touching a three-month high as traders digested the latest U.S. and Israeli strikes on Iran and a spike in crude prices that put inflation and growth jitters back in play. The S&P 500 hovered near unchanged late in the morning. “At times when there is nervousness, people will go to the leaders in the market,” said Joe Saluzzi, co-head of equity trading at Themis Trading. 1
After fresh turmoil in the Middle East rattled the energy network—strikes, counterattacks, and facility shutdowns, plus shipping snarled through the Strait of Hormuz—oil prices spiked. Brent shot up as much as 13% to $82.37 a barrel before giving up some gains. U.S. crude jumped too, according to Reuters. 2
The oil market keeps a close eye on Hormuz, since about 20% of the world’s supply passes through that narrow corridor—and if there’s any hint of trouble, traders waste no time piling into fresh risk hedges. William Jackson at Capital Economics warns that if conflict drags on, Brent could make a run at $100, potentially tacking on 0.6 to 0.7 points to global inflation. Reuters, for its part, points out the VIX has climbed roughly 33% this year, and U.S. bond volatility isn’t far behind. 3
The VIX was quoted at 20.44 late Monday, rising 2.92% for the session, Cboe market data showed. It had started the day higher, opening at 24.66. Options flows zeroed in on the 22 strike for calls expiring March 18. Cboe, which tracks the index, calls the VIX a measure of near-term volatility implied by S&P 500 option prices. 4
Oil and gas jumped, the dollar pushed higher, and gold caught a bid as traders pulled back on risk, though U.S. stocks clawed back some of their losses. “The actions that the United States and Israel took over the weekend has global markets on edge,” Chris Zaccarelli, chief investment officer at Northlight Asset Management, said, noting that investors weren’t showing signs of “panicking.” 5
Volatility traders tend to watch round numbers for signs of a quick shift in positioning. On Monday, the VIX popped above 22 for a short stretch—an area that “often acts like a ‘trigger’ as positioning changes quickly when volatility expands,” according to Seeking Alpha. 6
The VIX relies on live bid and ask prices for S&P 500 options, aiming to capture a steady 30-day outlook for expected market swings. It does this by weighting contracts set to expire in about 23 to 37 days. That so-called “implied volatility” figure—rooted in options pricing—is essentially the market’s own estimate, embedded in derivatives, of how much stocks might jump or drop in the coming month. 7
Even so, the surge in volatility can evaporate just as fast if the fighting doesn’t escalate. Early Monday, stock-index futures slid more than 1% and the VIX spiked to a three-month peak at 23.4. IG’s Chris Beauchamp flagged “plenty of scope for more downside” should the conflict spread to oil and gas sites. On the other hand, Wells Fargo chief equity strategist Ohsung Kwon sees the S&P 500 tumbling to 6,000 if crude climbs past $100 a barrel—a worst-case, oil-driven “stagflation” blow where inflation stays high but growth stalls, and earnings take a hit. 8
Some pointed out that stocks usually shake off geopolitical shocks unless oil holds high for a while. Morgan Stanley’s Mike Wilson isn’t shifting his stance unless crude jumps past $100 a barrel. In his note, he said geopolitical events “haven’t led to sustained volatility for equities.” 9
Right now, traders are watching one thing: does the conflict draw in more energy assets and key shipping lanes, or does it calm down enough for markets to price the risk without the VIX barely moving?
