Global markets are preparing for turbulence following military strikes involving the United States, Israel, and Iran, with analysts warning of potential sharp fluctuations in asset prices.
Investors are adopting a “risk-off” approach, moving capital into safer assets amid uncertainty. Gold is expected to rise as demand for safe-haven assets increases, consistent with historical trends during Middle Eastern conflicts.
Energy markets are particularly susceptible, with Brent Crude Oil prices likely to rise if Gulf shipping routes or production facilities are disrupted. The region’s importance in global energy supply makes it vulnerable to prolonged conflict.
Logistics analysts warn that nearby shipping routes may face heightened security risks, leading to higher shipping costs, delays in Asia–Europe trade, and increased insurance premiums for carriers.
Financial experts advise focusing on long-term portfolio strategies rather than reacting to short-term market movements. The situation remains sensitive to developments in the Gulf and potential responses from Western governments.
Susannah Streeter, Chief investment Strategist, Wealth Club said: “Financial markets are set for another shock of volatility following fresh strikes in Iran.
“While risks of conflict erupting again were bubbling given the US troop build-up in the Gulf, hopes had been pinned on fresh negotiations, and the decisive military action came sooner than expected. We are set to see another pile-on into assets perceived as safe havens such as gold, as investors look to shelter their money, given the course of the conflict is so unpredictable.
“Gold had already been hovering close to two-month highs, and demand is looks set to ramp up.
“Oil prices had already been creeping up as nerves became more frayed and they are set to shoot sharply higher given the risks of disruption to global oil supplies. Iran has the world’s third largest crude reserves, but the nation also controls the Strait of Hormuz a vital passage for tankers and other ships. The closure of the Strait, through which around 20% of global oil and gas supplies pass, would be hugely disruptive, particularly for other major oil producers in the region like Saudi Arabia.
“It temporarily shut the Strait during live fire drills earlier in February, exposing the fragility of the global trading route. These risks adding yet more upheaval to freight companies many of which are already avoiding the Red Sea due to attacks by Houthi Rebels. Maersk has temporarily retreated again from Red Sea sailings again on key services, redirecting them via the Cape of Good Hope. This re-routing adds to freight costs and risks snarling up supply chains. With energy and freight costs set to rise, it adds to price pressures, just as inflation appeared to be coming under control in countries like the US and the UK.
“Investors have been bracing for a rise in geopolitical tensions and now they are having to buckle up for another rollercoaster ride. 70% of investors surveyed by Wealth Club saw global tensions as the biggest threat to portfolios this year. However, during periods of volatility, it’s also important to remember that time in the market and diversification have consistently been the foundations of successful investing. For investors owning quality companies over the long term, big bumps in the road are part of the journey.
“Assets such as gold and more defensive stocks including utilities, healthcare firms, companies selling consumer staples and those with reliable, high‑yielding dividends, tend to be more resilient in eras of unpredictability.’’
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