How markets reacted to conflict in the Middle East, and what you can learn about investing

Conflict in the Middle East has dominated headlines in recent months, and understandably so. 

Events such as these can have devastating consequences for people and communities, and these human impacts should always remain at the forefront of people’s minds.

At the same time, you might have wondered what these ongoing tensions mean for your investments.

This is especially true when headlines focus on rising oil prices, disrupted supply routes, and market volatility.

Indeed, Reuters reports that disruption around the Strait of Hormuz has significantly affected oil traffic so far, with Saudi Aramco’s chief executive warning that continued interruptions could delay the global oil market’s recovery until 2027. 

When news like this is released, it can be tempting to consider making changes to your portfolio to minimise potential losses.

While it is entirely natural to feel concerned during periods of geopolitical uncertainty, history suggests that reacting emotionally to market movements might not always benefit you.

Continue reading to discover what previous geopolitical shocks can teach you as an investor, and why a bespoke financial plan from Belvedere Wealth could help you stay focused on your long-term goals. 

Conflict in the Middle East has created considerable uncertainty around the globe

The war in Iran has been one of the most significant geopolitical events affecting investors so far this year.

While the loss of life and humanitarian consequences are, of course, the most serious concerns, markets have also been responding to the potential economic effects.

One of the main concerns has been the Strait of Hormuz. 

This is one of the world’s most important energy routes. As such, any threat of disruption can quickly affect oil prices, inflation expectations, and investor confidence. 

This has already significantly impacted markets. The BBC reports that Brent crude rose by more than 4% to $105.94 a barrel at one point before falling back to around $105. 

Global oil prices are predicted to remain in the “low 100s” for much of the year, even if the Strait opens again as early as June 2026. 

However, it’s vital to remember how quickly these conditions can change. 

Rhetoric from US and Iranian leaders is constantly shifting towards ceasefires and continued hostilities, which makes it nearly impossible to try to predict future events.

This is why making investment decisions based on the latest update can be so difficult. By the time you read a headline, markets might have already reacted.

And, by the time you make a decision, the situation may have changed again.

Markets have faced geopolitical shocks before and often recovered over time

While events in the Middle East may have understandably caused concern, it’s worth remembering that geopolitical uncertainty isn’t new. 

Markets have experienced conflicts, energy shocks, and political instability over the decades, and while these events can cause short-term volatility, they don’t necessarily prevent markets from recovering over time. 

According to AJ Bell, the FTSE 100 fell by nearly 4% in a single day when Russia invaded Ukraine. 

If you had responded by selling your investments in an attempt to cut future losses, you might have turned a paper loss into a real one.

The same source states that the stock market index recovered most of this decline the following day, after Western nations imposed sanctions against Russia. 

Even when the news is serious, markets can adjust quickly, and a fall can turn into a rise sooner than you expect, highlighting the importance of staying invested, as Fidelity reports.

Missing just 10 of the market’s best days of returns could halve your gains, based on analysis of the FTSE 100 between 1992 and the end of February 2026. 

Of course, past performance isn’t a reliable indicator of future gains. Still, these figures show that attempting to move in and out of the markets during periods of uncertainty can be incredibly challenging. 

Read more: How to be a successful investor: Following a strategy that’s right for you

Instead, maintaining a disciplined approach and focusing on your long-term bespoke plan from Belvedere Wealth may be more effective than reacting to each new development as it arises.

Market noise might prompt you to make emotion-led decisions

Even when you understand the importance of staying calm, this can be easier said than done. 

When global events dominate the news, this sheer volume of information can become difficult to process. Headlines about oil prices, investor withdrawals, and market volatility can create the impression that you need to act immediately. 

This is where “noise” can become an issue, as not every update or piece of news should lead to a change in your investments.

This emotional pull is incredibly powerful, with Calastone reporting that the war in the Middle East led to a sharp increase in equity fund withdrawals in March 2026.

Indeed, investors withdrew £1.44 billion from equity funds, up from £927 million in February, making March the seventh-worst month on record for equity fund outflows.

At first glance, reducing your exposure to equities might feel like a way to regain control. Yet, these decisions might be driven by emotion rather than your long-term objectives. 

Some common behavioural biases can also reinforce this, such as:

• Loss aversion, where losses feel more painful than equivalent gains feel rewarding

• Herd mentality, when you feel pressured to follow what other investors appear to be doing

• Recency bias, where recent events feel more significant than long-term evidence. 

Read more: Why your most important goals could trigger financial bias

Taking a step back and recognising these influences could help you make decisions more calmly. 

Belvedere Wealth could help you stay focused on your long-term plan

At Belvedere Wealth, we understand that periods of geopolitical uncertainty can feel unsettling. It is only natural to question whether your current approach is still right for you when headlines are difficult to ignore.

This is where a bespoke financial plan can make a difference.

We could help you look beyond short-term market movements and assess whether your goals, time frame, or capacity for risk have actually changed.

For instance, we may review whether your portfolio remains appropriately diversified across different asset classes, sectors, and regions.

While diversification doesn’t remove risk entirely, it could help reduce the impact of volatility in a single area of the market. 

We could also use cashflow planning to show how periods of short-term volatility might affect your plans, helping you understand whether market movements are likely to disrupt your progress towards your long-term goals.

To find out how we can support you, please fill in our online contact form, email us at enquiries@belvederewm.com, or give us a call at +44 (0)203 633 6603.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.