Lazard
Oil prices jumped more than 10 per cent to trade above $75 per barrel in reaction to the strikes and could continue climbing if Iran further retaliates, especially by targeting energy facilities or shipping routes. A temporary disruption of the Strait of Hormuz, a key transit chokepoint for 30 per cent of seaborne oil and 20 per cent of LNG (liquified natural gas), could push oil prices upwards of $120 per barrel and would likely require US direct involvement to secure safe passage for energy flows. Even in the absence of a Strait closure, oil markets will see continued volatility as the risk of a disruption evolves.

Long-term market implications depend on the duration of the conflict. Prolonged instability could discourage foreign direct investment in the Gulf region, increase business risks, and destabilise energy markets, while a swift resolution could limit economic impacts to short-term volatility.

Foreign direct investment (FDI) in the region is likely to remain stable for now, but sustained conflict or broader regional escalation could drive significant investment declines, particularly within the energy and logistics sectors in Gulf economies such as Saudi Arabia and the UAE. The business climate could also deteriorate if retaliatory attacks expand beyond Israel and place US personnel and assets across the region at higher risk. 

US military forces are already on high alert, signalling potentially increased exposure for American businesses with interests in Iraq, Qatar, Bahrain, and other Gulf states. Proxy activity from groups like Hezbollah or PMUs may intensify localised risks, further pressuring multinational corporations operating in critical nodes of the region’s infrastructure.

Carson Group (US firm). Ryan Detrick, chief market strategist
Uncertainty is swirling after the strikes last night (13 June), with global markets taking a sell-first and ask-questions-later approach. It is at times like these though that investors should not panic and remember that geopolitical events can cause volatility, but the underlying pinning of the US economy is still solid and that is what will continue to drive likely higher prices in 2025.

Sonu Varghese, global macro strategist, also at Carson Group
Diversification hasn’t exactly been a portfolio hero over the past decade – but this year, after the Liberation Day tariffs, it’s earned its stripes. With so much uncertainty in the air, our mantra has been: when in doubt, diversify it out. Still, true diversification goes beyond just holding bonds. Relying on a single source isn’t enough. That’s why we also favour gold, managed futures, and even low-volatility stocks to help smooth the ride.

Michaël Nizard, head of multi-asset and overlay, and Nabil Milali, multi-asset and overlay portfolio manager at Edmond de Rothschild Asset Management
While the financial markets were anticipating an easing of tensions in the Middle East, given the progress made in talks between Tehran and Washington on the nuclear issue, the geopolitical risk suddenly came back to the fore with the attacks carried out by Israel last night on Iranian soil. Several nuclear sites were hit, along with senior military officials, with the aim of putting a stop to the development of Iran's nuclear programme, the progress of which was considered worrying. 

Tehran has already launched its response, although it has not had any serious consequences at this stage, as almost all the Iranian drones have been intercepted by the Israeli defence system. However, the communication from Iran’s supreme leader, A Khamenei, leaves no doubt that further reprisals are to be expected over the next few days, as he considers the Israeli attack to be a “declaration of war.”

Two scenarios seem to be emerging:

1. A large-scale Iranian response that would lead to a full-scale Israeli declaration of war. In this case, US intervention in the conflict would be unavoidable, with the risk of a regional conflagration that could plunge the world into an unprecedented escalation. The main consequence would be a disruption of oil flows, with the potential risk of the closure of the Strait of Hormuz and an uncontrolled surge in crude oil prices, leading to a sharp correction in risky assets given the risk of a global economic recession;

2. A more measured response from Tehran, similar to previous phases of tension between the two countries over the past two years.

There are still a number of reasons to hope that this second scenario can materialise and that the conflict can be contained. On the one hand, the US has indicated that it was informed of the Israeli attack but that it did not support it. US President Donald Trump has also indicated that he still wants to resume talks with Tehran and could therefore exert diplomatic pressure on both sides to encourage restraint. 

On the other hand, the Iranian regime is in a particularly delicate position as its economy is suffocated by international sanctions and the discontent of its population continues to grow, largely explaining its return to the negotiating table with the United States in recent months. Its military capabilities also appear to have been weakened, as shown by the ineffectiveness of its responses during previous phases of tension and the weakening of several military groups it supported in the region. Finally, the measured reactions of the other regional powers suggest that the current episode is not for the moment perceived as a change in the security paradigm and therefore give reason to hope that tensions will not spread to the Middle East as a whole.

When it comes to financial implications and asset allocation, all these factors are encouraging investors to be cautiously optimistic about the outcome of this geopolitical situation. Although crude oil prices have risen sharply (+7 per cent to $74 per barrel), they have fallen back somewhat after a more pronounced initial reaction. The very high level of uncertainty will require a greater geopolitical risk premium to be maintained in prices over the coming weeks, but a surge in Brent to levels that could weaken the global economy or trigger a new wave of inflation could be avoided if OPEC and Saudi Arabia, in particular, agree to step up production.

Given Iran's relatively low weighting in the global economy, the risk of a spike in oil prices is the main channel through which this geopolitical shock is transmitted to the financial markets, which explains the low impact on the equity markets at this stage. While gold is playing its role as a safe-haven asset well (up 1.5 per cent at $3,430/ounce), it should be noted that sovereign yields are not offering much of the same appeal, a sign that inflationary fears are prevailing in the eyes of investors, insofar as this risk is added to the already prevalent one of tariffs. 

Finally, the dollar's appreciation remains particularly modest, once again testifying to the strength of the greenback's underlying downward trend. Against this highly uncertain backdrop, we are maintaining a somewhat cautious approach to our equity investments, particularly in US equities, where share prices have risen faster than recent earnings growth. We also intend to adopt a policy of actively hedging the currency risk on the dollar, as we have been doing for several months.