The conflict involving Iran has escalated in recent days following joint airstrikes targeting key military sites tied to Iran’s nuclear program. The death of Iran’s Supreme Leader, Ayatollah Ali Khamenei, marked a significant turning point, and Iran has since launched missile attacks across the region, targeting Israel and several Gulf states including Qatar, the United Arab Emirates, Bahrain, and Saudi Arabia.
The ripple effects have reached global energy markets. Shipping through the Strait of Hormuz, a narrow passage that carries roughly 20 percent of the world’s oil supply, has slowed significantly. When a channel that important narrows or pauses, energy prices tend to move quickly. Oil and gas prices rose as markets reacted, though at this point a prolonged disruption to global supply is not our base expectation.
Moments like this can feel like sudden storm clouds over financial markets. The headlines become louder and volatility often follows. History shows, however, that markets tend to steady themselves once the initial uncertainty passes, particularly when the broader economy remains healthy.
And right now, the broader economic backdrop remains relatively strong. Corporate earnings continue to grow, supported in part by ongoing investment in technology and artificial intelligence. Inflation pressures have also begun to ease, which could give the Federal Reserve room to lower interest rates later this year if that trend continues.
Periods of geopolitical tension can test investors’ patience, but they rarely change the long-term direction of markets unless the economic impact becomes widespread and persistent. For that reason, our guidance remains the same: stay focused on your long-term plan, remain diversified, and avoid reacting to short term headlines.
Last and certainly not least, we want to acknowledge the service men and women currently in harm’s way. Our thoughts are with them and their families, and we hope for their safe return home.
As always, please reach out if you have questions.
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