Insight Market implications of US conflict with Iran

Ashley Oerth
James Anania
and
9 September 2026
Professionals seated around a table during a business meeting, engaged in discussion in an office setting.

Key takeaways

  • Iran doesn’t produce that much oil but can impact world energy markets in other ways.

  • Geopolitical uncertainty tends to result in oil price volatility, yet historical events haven’t impacted markets as much as many believed.

  • Oil flows are largely bypassing the Strait of Hormuz. 

The current US conflict with Iran has been a source of volatility in crude oil prices, but the scale of economic and market disruption has been far more muted than some commentators initially expected. Given historical data on past US conflicts in the region and tensions surrounding the Strait of Hormuz, the future is uncertain. But historical experience may provide insight into potential market outcomes.

Oil flows are largely bypassing the Strait of Hormuz

A common concern about the conflict with Iran is the loss of oil and other energy resources from the global market. Prior to the conflict, about a fifth of the world’s oil supply was transported through the Strait of Hormuz, a narrow channel out of the Persian Gulf. However, we estimate about 80% of the oil is still flowing through a combination of US navy escorted vessels and other channels such as land-based pipeline routes.1 This has helped limit the headline impact of the events in the Middle East.

The economy is less sensitive to oil supply than in the past

The energy intensity of economic activity is not what it once was. If we measure economic activity versus the amount of oil an economy consumes, we find that the oil intensity of global GDP is around half what it was in 1990 — and far lower compared to 1970.2This means that changes in oil prices are less impactful than they once were. We view this as a mitigating factor in considering the impact of the US-Iran conflict.

Falling oil demand and inventory drawdowns helped stabilise energy prices

Early in the outbreak of the conflict, major economies mobilised their strategic stockpiles to alleviate potential shortages in the global oil market.3 These drawdowns have helped minimise potential disruptions from the conflict. While higher oil prices have exerted upward pressure on inflation this year, we expect the worst of the oil price movements are behind us. Stable or lower energy prices should help see inflation stabilise or even trend lower.

Geopolitical uncertainty hasn’t impacted the markets as much as many people believe

While geopolitical uncertainty like this often leads to temporary volatility, it hasn’t historically weighed significantly on longer-term stock market returns. The MSCI World Index, dating back to the 1970s, has averaged a 7.8% gain in the year following a peak in the Geopolitical Risk Index, which generally spikes during periods of global conflict.4 This has been a helpful template in navigating this conflict as well, in our view.

  • 1

    Sources: Windward, International Energy Agency, Reuters, and CNBC as of August 25, 2026.
  • 2

    Sources: Windward, International Energy Agency, Reuters, and CNBC as of August 25, 2026.
  • 3

    Source: Bloomberg L.P., International Energy Agency, and US Department of Energy, as of June 30, 2026.  
  • 4

    Source: Policyuncertainty.com as of Aug. 25, 2026. Based on the Caldara and Iacoviello Geopolitical Risk Index, which reflects automated text-search results of the electronic archives of 10 newspapers: Chicago Tribune, the Daily Telegraph, Financial Times, The Globe and Mail, The Guardian, the Los Angeles Times, The New York Times, USA Today, The Wall Street Journal, and The Washington Post. Caldara and Iacoviello calculate the index by counting the number of articles related to adverse geopolitical events in each newspaper for each month (as a share of the total number of news articles). An investment cannot be made directly in an index. Past performance does not guarantee future results. The Geopolitical Risk Index peaks were Oct. 1962, June 1967, Oct. 1973, Dec. 1979, June 1982, Aug. 1990, Feb. 1991, Oct. 2001, March 2003, March 2022, and Oct. 2023.

Related insights

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    Important information

    Data as at 26 August 2026.

    This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.

    Views and opinions are based on current market conditions and are subject to change.