Author Paul Kearney, CPA, CFP®

Expert Reviewer Matt Englund

Over the weekend, the United States and Israel launched a series of attacks on Iran, which have killed at least 550 people since Saturday¹, including 165 civilians and children at a girls’ school in Minab², and Iran’s Supreme Leader, Ayatollah Ali Khamenei, whose assassination was confirmed by state media on Sunday³.

Iran has responded with counterattacks across the Middle East, targeting Israel and US military bases and allies in the United Arab Emirates, Qatar, Kuwait, Bahrain, Jordan, Saudi Arabia and Cyprus. These have resulted in ten Israeli deaths⁴ and six US soldiers killed in action.⁵

Before we begin to unpack the economic impacts of these attacks and the risk of them escalating into a broader regional war, we — as an organisation — want to centre the human suffering at the heart of this matter.

Historically speaking, foreign military interventions do very little to improve the lives of ordinary people, even those living under violent, authoritarian regimes. More often, they compound suffering — killing civilians, displacing families, destroying infrastructure, damaging the local environment, and entrenching instability that lingers long after the strikes end. And without a clear alternative successor in Iran, experts have warned that US regime-change efforts may well backfire and draw them into an “Iraq-style forever war”.^{6 7 8}

Beyond these human impacts and from a market perspective, last weekend’s attacks represent one of the most significant geopolitical escalations in the Middle East in decades. They have deepened global insecurity and highlight the increasing willingness of powerful states to flout international law and rules-based order. The result has not only broadened the footprint of existing hostilities in the region but it has also sharply elevated the risk for global energy supply chains, regional trade routes, and investor sentiment.

Immediate market reaction.

Energy markets.

Oil prices rallied approximately 13% at market open following the strikes. This occurred despite OPEC+ agreeing to increase production by 206,000 barrels per day from April in an effort to calm markets.

The central concern is not Iran’s production alone, but the vulnerability of regional transport routes.

The Strait of Hormuz — which accommodates roughly 20% of global oil trade — is now viewed as a critical risk point.⁹ While oil exports have not yet been materially disrupted, the threat of interference remains elevated.

Safe-haven assets.

Traditional defensive assets rallied sharply including:

• US Dollar (USD)
• Japanese Yen
• Swiss Franc
• Gold

Equity markets.

Equity markets have so far shown relative resilience, suggesting investors are assessing whether the conflict can be contained.

• ASX 200 index was down 0.82% at market open
• S&P 500 futures were down roughly 1%

In short – markets are volatile, but not disorderly at this stage.

Other matters.

Air travel in the region has been heavily affected, with many Middle Eastern air corridors closed to civilian flights, leading to higher transport costs, logistics difficulty and operational delays.

Economic implications.

Through the coming weeks, we expect energy markets will be highly susceptible to a price shock, and market volatility likely to rise as a result of increased tensions throughout the middle east.

Oil exports remain the primary channel through which regional tensions could materially affect the global economy.

Inflation.

Each sustained US$10 increase in oil prices is expected to add approximately 0.3–0.4% to US inflation. If the Strait of Hormuz faces ongoing shutdowns, disruptions to oil and gas supply could be long-lasting.

Consumer spending.

Although the US is more energy self-sufficient than in prior decades, higher petrol prices reduce disposable income and weigh on consumption.

Monetary policy.

Elevated oil prices complicate central bank policy. A renewed inflation impulse could disrupt the Federal Reserve’s expected interest rate easing trajectory, even with policy guidance from pro-cut voices like Kevin Warsh advocating for rate reductions.

Australia.

For Australia, each US$10 rise in oil prices typically adds around 10 cents per litre to petrol prices. With the USD regaining its safe-haven status, the impact on Australian consumers could be more pronounced.

Additionally, any sustained disruption to Middle Eastern energy exports could slow China’s growth, potentially reducing Australian exports.

Key risks to monitor.

We are closely monitoring several key risks:

• The scale and persistence of Iranian retaliation.
• Whether the conflict remains geographically contained.
• Any direct attacks on Gulf energy infrastructure.

The scale and duration of energy disruption will determine whether this remains a short-term volatility event or evolves into something more structurally concerning. 

When considering downside risk, the following historical context is valuable:

Iran produced approximately 3.45 million barrels per day in January (~3% of global supply). While Iran alone may not materially threaten global oil supply, prolonged closure or restriction of the Strait of Hormuz could push oil above US$100 per barrel (currently around US$73, a seven-month high).

Historically, sharp oil spikes have triggered recessions — notably between 1979 and 1980 following the Iranian revolution when oil prices tripled.

That said, the global economy — particularly the United States — is less reliant on imported oil than in prior decades, which may mitigate systemic risk.

Portfolio position.

Periods like this reinforce why portfolios are built for resilience rather than perfect predictions.

Geopolitical events like these can trigger sharp market movements, but long-term outcomes will ultimately depend on whether disruptions — particularly to energy supply — become sustained and systemic.

Our approach includes:

• Maintaining a well-diversified portfolio across sectors and asset classes
• Focusing on high-quality assets with strong fundamentals
• Incorporating defensive levers to manage geopolitical and market shocks
• Avoiding knee-jerk reactions, instead taking a long-term, disciplined perspective

By staying the course and relying on a diversified, resilient strategy, portfolios are well-positioned to navigate uncertainty while keeping long-term investment objectives on track.

Need a hand understanding the impact of attacks on Iran?

If you need help dissecting the data and navigating the noise, get in touch.

Sources:

1 AJ Labs. Death toll and injuries live tracker. Al Jazeera. 3 Mar 2026.

2 McClure, Tess. Death toll from school bombing in southern Iran reportedly rises to 165. The Guardian. 2 Mar 2026.

3 Gambrell, Jon. Iran’s Supreme Leader Ayatollah Ali Khamenei, who led the Islamic Republic since 1989, is dead at 86. AP News: 2 Mar 2026.

4 See Footnote 1

5 Betts, Anne. Sixth American service member killed in Iran operation. The Guardian. 3 Mar 2026.  

6 Goodman, Amy. Iranian American Scholars Warn Regime Change Efforts Will Backfire.  Democracy Now! 2 Mar 2026.

7 Heflin, Donald. Despite massive US attack and death of ayatollah, regime change in Iran is unlikely. The Conversation. 1 Mar 2026.

8 Barnes-Dacey, Julien et al. A war with no winners. European Council on Foreign Relations. 2 Mar 2026.

9 Commins, Patrick. What disrupting the strait of Hormuz could mean for global cost-of-living pressures. The Guardian. 3 Mar 2026.