Geopolitical events can feel overwhelming—especially when headlines move quickly and markets react just as fast.
The recent U.S. and Israeli strike on Iran, and the resulting escalation across the Middle East, has created new uncertainty for global markets and energy supply. Whenever events like this occur, investors understandably ask the same questions: What does this mean for the economy? What could happen to markets? And what should I do with my investments?
While the situation continues to evolve, there are a few important takeaways investors should understand. In this update, we break down what has happened, what it could mean for oil prices and economic growth, and why maintaining a disciplined, long-term investment strategy remains one of the most important principles during periods of geopolitical uncertainty.
The U.S. and Israel launched a major military strike on Iran, killing the country’s Supreme Leader, Ayatollah Ali Khamenei. Since the initial attack on February 28, hostilities have escalated, with continued U.S. and Israeli aerial bombardments targeting Iranian military and government infrastructure. Vowing retaliation, Iran has launched drone and missile attacks against the U.S. and its interests across the region. Casualties have mounted on multiple sides, while European governments have called for de-escalation amid rising concerns about broader regional instability.
The strike represents a significant escalation relative to prior regional conflicts, introducing uncertainty around Iran’s leadership transition and the potential for wider regional involvement. For markets, the primary concern is not the conflict itself, but whether it disrupts global energy flows, shipping routes, or broader financial conditions.
While Iran produces only 4% to 5% of the world’s oil, roughly 20% to 25% of global oil supply (and about 20% of liquefied natural gas) flows through the Strait of Hormuz – a 21-mile waterway bordered by Iran to the north and Oman and the UAE to the south. Reports indicate Iran’s military may be restricting traffic through the strait, though Iran’s Foreign Minister has stated the country has no intention of formally closing it.
The U.S. economy has become significantly less dependent on oil over time, as it has transitioned from a manufacturing-based economy (which is highly oil-intensive) to a service-based economy that requires far less energy input. Additionally, the United States is now the world’s leading oil producer, meaning higher oil prices can partially support domestic investment and job growth in the energy sector.
More broadly, higher oil prices tend to affect the U.S. economy in three primary ways. First, they create inflationary pressure by raising gasoline prices as well as production and transportation costs. Second, they can reduce consumer spending, as households divert disposable income toward higher energy expenses. Third, supply shocks tend to slow overall economic activity as businesses and consumers adjust to a new and uncertain energy price environment.
We expect markets to experience elevated volatility over the coming weeks as the scope and duration of the conflict become clearer. U.S. equity markets had already shown signs of unease this year, including a rotation away from AI-related companies toward more tangible sectors such as industrials, energy, and materials, alongside growing concerns about potential risks within credit markets.
A review of past U.S. military actions in the Middle East shows that markets may react in the near term but have historically stabilized as investors refocus on economic fundamentals – like broadening growth and a resilient labor market, which remain strong.
Because geopolitical developments are unpredictable and fast-moving, we encourage investors to rely on diversification of asset classes and investment strategies to help manage risk.
Periods of geopolitical conflict can be unsettling, and heightened headlines often lead to short-term market volatility. Long-term investment plans and asset allocation strategies, however, are often built using decades of market data that already incorporate world wars, regional conflicts, political crises, and other periods of significant uncertainty. These frameworks are designed with the expectation that geopolitical disruptions will occur from time to time.
Periods like this also highlight the difficulty of making investment decisions based on geopolitical headlines. Market reactions often occur quickly and unpredictably, and markets frequently begin to recover before geopolitical outcomes become clear. As a result, attempts to time market movements around evolving events have historically proven challenging. Maintaining a disciplined investment process – grounded in diversification, risk management, and long-term objectives – remains the more reliable approach during periods of uncertainty.
While the current environment may feel uncomfortable, history suggests the most prudent course for long-term investors is to remain invested, stay diversified, and stay focused on long-term objectives.
Moments like this are a reminder that markets will always experience periods of uncertainty. From geopolitical conflicts to economic cycles, volatility is a normal part of long-term investing.
The most successful investment strategies are typically built with these realities in mind—diversification, risk management, and long-term discipline are designed to help investors navigate periods just like this.
If you have questions about how current events may affect your portfolio, or if you would simply like to review your investment strategy during this period of heightened volatility, our team is here to help.
Please don’t hesitate to reach out. We’re always happy to discuss your plan and help ensure your strategy remains aligned with your long-term goals.
Johnathon Opet, CFP® is a financial advisor located at EmVision Capital Advisors, 251 W. Garfield Rd. Suite 155 Aurora, OH 44202. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at (330) 954-3770 or at info@emvisioncapital.com.
Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Additional advisory services offered through EmVision Capital Advisors, LLC are separate and unrelated to Commonwealth. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network. Registration as an Investment Adviser does not imply any level of skill or training.
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8798952.1 | 03/2026 | EXP 03/31/2028