How the Iran Conflict Affects Your Investments and Long-Term Portfolio

Recent news has reported that the U.S. and Israel have launched military strikes against Iran, targeting its leadership, military assets, and nuclear infrastructure. Iran’s Supreme Leader has been confirmed killed, and Iran has responded with missile and drone attacks across the Middle East. President Trump has stated that the goal of the operation, called "Operation Epic Fury," is regime change in Tehran, with strikes expected to continue for weeks and a number of U.S. troop casualties already reported.

While the safety of civilians and military personnel is the most important concern, investors naturally have questions about what this means for their portfolios, oil prices, and financial markets. This update aims to provide some clarity.

President Dwight D. Eisenhower once said that "plans are worthless, but planning is everything." In other words, we can’t always predict specific events, but we can prepare for uncertainty. A well-structured portfolio is designed to handle exactly these kinds of situations. The key for long-term investors is to separate geopolitical headlines from portfolio decisions. 

These strikes are part of a long-running conflict

Tensions between the U.S., Israel, and Iran have been building for years 

While the current strikes are significant, they did not happen overnight. The situation developed over a long period, including failed negotiations over Iran’s nuclear program, a major U.S. military buildup in the region, and President Trump’s pledge to support Iranian protesters who challenged the regime earlier this year. Historical context helps explain how we got here:

• Iran has supported groups like Hezbollah and Hamas for decades, contributing to ongoing conflicts across the Middle East.

• In 2019, Iran attacked Saudi Arabia’s oil infrastructure, temporarily disrupting global oil supply.

• Hamas’s October 2023 attack on Israel escalated regional tensions further, eventually drawing in Iran.

• Last summer, Israel launched a 12-day military campaign targeting Iran’s nuclear and missile programs.

• Earlier this year, Iranian protesters challenged their government, and negotiations over Iran’s nuclear program broke down, leading to the current U.S. military operation.

While the current strikes are broader in scope than past events, history shows that geopolitical conflicts are not always a direct cause of lasting market disruptions.

Energy markets are the most direct link between Middle East conflicts and investors 

Iran produces around 3 million barrels of oil per day and sits along the Strait of Hormuz — a critical waterway through which approximately one-third of all seaborne oil exports and one-fifth of natural gas passes. Even the threat of disruption to this route can affect global energy prices. Oil prices had already been rising before the strikes, and have since moved higher, to the low $70s for WTI and just under $80 for Brent crude.

However, it helps to keep some perspective. Current oil prices are still well below the 2022 peak of nearly $128 per barrel seen when Russia invaded Ukraine. The U.S. is also now the world’s largest oil and natural gas producer, which helps protect the domestic economy from global supply disruptions. Past events — like Russia’s invasion of Ukraine and the U.S. operation in Venezuela earlier this year — caused brief spikes in oil prices that faded faster than many expected.

Why staying invested matters during uncertain times 

Markets have weathered serious global events throughout history

It is natural to feel concerned when major geopolitical events unfold. But history shows that financial markets have continued to function through some of the world’s most serious crises — from World War II to the Gulf War to the conflicts in Iraq and Afghanistan. More recently, the Russia-Ukraine and Israel-Hamas conflicts created short-term uncertainty but did not permanently derail broader market performance.

It’s also worth noting that Iran plays very little direct role in most investment portfolios. Heavy sanctions and economic challenges, including a collapsing currency (the Rial) and hyperinflation, mean that very few investors have direct exposure to Iran in their investments.

Markets may be volatile in the coming weeks, but trying to time these movements has historically been counterproductive. Missing even a small number of the market’s best days can significantly reduce long-term returns.

The bottom line? The U.S. and Israeli strikes on Iran represent an important geopolitical development. However, history shows that investors who maintain diversified portfolios aligned with their long-term financial goals are best positioned to navigate periods of uncertainty.

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