Last UK and US troops leave Iraq as anti-Islamic State mission ends

A clean, orderly withdrawal without major security incidents would likely be read as a successful conclusion to a long commitment, potentially freeing up defense budgets for reallocation and reducing geopolitical risk premiums tied to active Iraq operations, though energy markets would remain sensitive to any subsequent regional instability.

If the withdrawal proceeds without formal resolution of underlying sectarian or governance tensions in Iraq, markets would plausibly treat this as a continuation of low-level regional fragility, with energy and defense sectors pricing in persistent uncertainty rather than sharp repricing.

Should the withdrawal trigger a rapid resurgence of ISIS or sectarian conflict requiring emergency redeployment, this would likely put upward pressure on oil volatility and defense spending, while signaling a failed exit strategy to markets already pricing geopolitical risk in the Middle East.