You’ve likely seen significant news coverage of the conflict involving Iran.
We wanted to provide a clear, straightforward update — what’s happened, how markets have responded and what it means for your portfolio.
What Happened?
In late February, the United States and Israel launched strikes on Iranian nuclear and military facilities, triggering a major escalation in longstanding tensions across the Middle East. Iran responded with hundreds of ballistic missiles and drones targeting military bases and energy infrastructure across the region.
The conflict quickly spilled into global energy markets. Iran moved to close the Strait of Hormuz — the narrow waterway connecting the Persian Gulf to the open ocean, through which around 20% of the world’s daily oil supply normally flows. It’s the only exit route for the oil and gas exports of Saudi Arabia, Iraq, Kuwait, Qatar, and the UAE, and there’s no meaningful alternative route if it’s closed.
The immediate market impact was significant:
- Oil prices surged around 58% in a matter of days, from roughly $72 to $114 per barrel.
- Tanker traffic through the Strait dropped around 70%, with over 200 vessels anchored and unable to transit.
- Qatar — which supplies around 20% of the world’s gas — suspended its export commitments after attacks on its energy infrastructure.
How markets have responded
Markets have reacted — but not excessively, and that’s consistent with history.
- Share markets are down around 4–6% globally — within the typical range for events like this.
- Gold spiked briefly but has since given back those gains. Higher oil prices are pushing up inflation expectations, which reduces the likelihood of interest rate cuts — and that actually weighs on gold.
- Bonds aren’t providing the usual safe-haven buffer, as inflation fears and flight-to-safety are roughly cancelling each other out.
- The Australian dollar has held up relatively well.
Australia is in a different position
One important point for Australian investors: we’re not in the same boat as most of the world here.
Countries like Japan, South Korea and Germany import nearly all of their oil and gas, which makes them heavily exposed to this kind of shock. Australia is a major energy exporter — particularly of LNG (liquefied natural gas). When global gas prices rise sharply, as they have, Australian producers benefit directly. Woodside and Santos both rose strongly in the opening days of the conflict, and the Australian dollar has been supported by higher commodity prices in a way most other currencies haven’t.
That said, it’s not all upside for Australia. Petrol prices at the pump will rise with global oil prices, and the Reserve Bank will need to weigh up whether higher energy costs add to inflation pressures. The net picture is meaningful insulation compared to energy-importing nations — but not immunity.
If you have any questions, or would simply like to talk through what this means for your situation, please don’t hesitate to get in touch.
CONTACT ALLAN HALL FINANCIAL PLANNING
The information contained in this email has been prepared by Rhombus Asset Management Pty Ltd (ABN 12 676 473 868; AFSL 558013) (‘RAM’).
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