How Geopolitical Events Like the Iran Strikes Affect Long-Term Investors
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 described the operation, called "Operation Epic Fury," as aimed at regime change in Tehran, with strikes expected to continue for weeks and U.S. troop casualties already reported.
While the safety of civilians and troops is the most important concern, investors naturally wonder what this means for markets, oil prices, and their portfolios. The key takeaway is that while specific events like this are hard to predict, markets have weathered many crises throughout history. A well-structured portfolio is designed to handle exactly this kind of uncertainty.
This is the latest development in a long-running conflict
Tensions between the U.S., Israel, and Iran have been building for a long time. This latest escalation follows a monthlong U.S. military buildup in the region, failed negotiations over Iran's nuclear program, and President Trump's pledge to support Iranian protesters earlier this year. Key moments in this ongoing story include Iran's 2019 drone strikes on Saudi oil infrastructure, Hamas's October 2023 attack on Israel, and last summer's 12-day Israeli military campaign targeting Iran's nuclear and missile programs.
While the current strikes are broader in scope than previous engagements, history shows that such conflicts are not always a direct driver of long-term market performance.
Oil prices and a critical shipping route
The most direct way Middle East conflicts affect markets is through energy prices. Iran produces around 3 million barrels of oil per day and sits along the Strait of Hormuz — a vital shipping channel through which roughly one-third of all seaborne oil exports pass. Oil prices had already been rising before the strikes and have since moved to the low $70s per barrel for WTI crude and just under $80 for Brent crude.
To put this in perspective, current prices remain well below the nearly $128 per barrel peak seen when Russia invaded Ukraine in 2022. Additionally, the U.S. became the world's largest oil and natural gas producer in 2018, which helps shield the domestic economy from global supply disruptions. Oil prices are also notoriously difficult to predict — after Russia's invasion of Ukraine, many expected prices to stay high indefinitely, but they declined much sooner than expected.
Why staying invested matters during uncertain times
It is natural to feel concerned when news headlines describe military strikes and the possibility of a wider regional conflict.
However, history shows that markets have navigated even the most serious global events — from World War II to the Gulf War — experiencing short-term swings but ultimately being driven by economic fundamentals over the long run. More recently, the conflicts involving Russia-Ukraine and Israel-Hamas created uncertainty but did not permanently derail broader market trends.
It is also worth noting that Iran has been under heavy international sanctions for years, meaning very few investors have direct exposure to the country in their portfolios. While markets may experience some volatility in the coming weeks, trying to time these short-term moves has historically been counterproductive. Missing even a handful of the market's best trading days can meaningfully 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.