13.06.25

Middle East Tensions Escalate: Market and Oil Price Impacts

Rising tensions between Israel and Iran have taken a decisive turn with Israel’s recent strikes on Iranian nuclear and military infrastructure—its most assertive military action in decades. The swift retaliation by Iran signals a new phase of direct confrontation, raising concerns about broader regional instability. While the human cost in the Middle East is likely to be severe, the global economic impact may hinge on the conflict’s effect on oil supply. Markets are watching closely, particularly with Iran’s role in global energy exports and the strategic importance of the Strait of Hormuz in global crude flows. Our Jersey Investment Director, William Lamond, takes a closer look at the latest situation for us.

_______

 

Israel and Iran have been in a proxy conflict since the Iranian revolution in 1979. The conflict has predominantly been done through Iran’s funding and training of Muslim extremists such as Hezbollah and Hamas to wage ongoing war against Israel. Military clashes between the two have been rare but have somewhat increased in the last few months. Last night’s Israeli attacks on Iranian military installations and nuclear weapons infrastructure were the first major military operation by the Israelis since Operation Opera in 1981, where Israel again attacked Iran’s nuclear weapons program. Unsurprisingly Iran has retaliated in kind by launching drone and missile attacks on Israel. The conflict between the two nations now look to have deteriorated to a point where retaliatory strikes could persist for the foreseeable future. There is potential for the Middle East to be destabilised further particularly if Shia Arab nations rally to Iran’s aid.

Iran has been attempting to build its own nuclear weapons since the 1980s and Israel has thwarted these efforts with the aid of the USA and certain European allies. Last night’s attack looks to be Israel acting autonomously from its usual backers. The attack highlighted that Israel felt Iran was getting close to producing its first nuclear warhead, which if true would have further endangered the security of country.

An escalation in the conflict will obviously have ramifications for the population in the Middle East and both sides will regrettably report the loss of civilian lives. In terms of the global impact, it should remain minimal apart from the potential hike in crude oil prices. Iran currently produces circa 3.5mn barrels of oil equivalent a day of which approximately 1.5mn is exported. If the conflict escalates to Israel attacking Iran’s oil infrastructure, this could put some stress in the export market, in the short term but OPEC and in particularly Saudi Arabia would be able to raise production to make up the short fall.

The only way the oil price will be impacted for a protracted period of time is if the current conflict escalates, dragging in other countries in the Middle East and potentially the NATO allies. In this unlikely event, crude oil supply could be significantly impacted as a large portion of Saudi Arabian, Iraqi and Iranian oil flows through the Straits of Hormuz.

Source: Bloomberg Finance L.P.

 

_______

 

Hear more from the Oakglen experts

Our investment team continue to provide interesting and informative content to help keep you in the loop on recent global news and market trends. See below for some key highlights from around the world which some of the investment management team have recently covered:

 

Read more:

 

 

 

You can read other articles from the team on our News & Insights page.

Sign up below to receive similar content directly into your inbox.

 

 

Want to become an Oakglen client?

Get in touch with one of our wealth team via the Contact Us page to hear more about our products and services, and how suitable they are for you and your personal circumstances.

William Lamond
Investment Director - Jersey
+44 (0) 1534 610 126

Disclaimer

This document is distributed by Oakglen Wealth Limited and / or Oakglen Wealth (Jersey) Limited (hereafter “Oakglen”) to you for your information and discussion only. Unless otherwise stated nothing in this document constitutes investment, legal, accounting, real estate, conveyancing, surveying or tax advice, or a representation that any investment is suitable or appropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you. It is not a solicitation or an offer to buy or sell any security or other financial instrument. Any information including facts, opinions or quotations, may be condensed or summarised and is expressed as of the date of writing. The information may change without notice and Oakglen is under no obligation to ensure that such updates are brought to your attention. The price and value of investments and any income that might accrue could fall or rise or fluctuate. The price of shares and income from them may fall as well as rise and is not guaranteed. You may not get back the amount of your original investment. A change in the economic environment, possible changes in the law and other events may cause future performance to deviate from that expressed or implied in this document. Please note that past performance, simulations and forecasts are not a reliable guide to future returns. If an investment is denominated in a currency other than your base currency, changes in the rate of exchange may have an adverse effect on value, price or income. Investing in Packaged Retail and Insurance-based Investment Products (PRIIPs) carries a high level of risk and may not be suitable for all investors. Any information provided by a client and used to produce this document will have been checked by Oakglen for plausibility only and the client notified accordingly of any obvious anomalies. This document and any related recommendations or strategies may not be suitable for you; you should ensure that you fully understand the potential risks and rewards and independently determine that it is suitable for you given your objectives, experience, financial resources and any other relevant circumstances. You should consult with such adviser(s) as you consider necessary to assist you in making these determinations. The opportunities and risks associated with each investment product can be found in the relevant underlying securities prospectus and any other supplementary documents. All documents will be made available at any time upon request. Oakglen does not advise on the tax consequences of investments, and you are advised to contact a tax adviser should you have any questions in this regard. The levels and basis of taxation are dependent on individual circumstances and are subject to change. This document may relate to investments or services of an entity/person outside the United Kingdom, or to other matters which are not regulated by the Financial Conduct Authority, or in respect of which the protections of the Financial Services Compensation Scheme. Further details as to where this may be the case are available on request in respect of this document. Additionally, this document may relate to investments or services of an entity/person outside Jersey, or to other matters which are not regulated by the Jersey Financial Services Commission, or in respect of which the protections of the Jersey Financial Services Commission for retail clients. Further details as to where this may be the case are available on request in respect of this document. This document has been prepared from sources Oakglen believes to be reliable, but we do not guarantee its accuracy or completeness and do not accept liability for any loss arising from its use. Oakglen reserves the right to remedy any errors that may be present in this document. Oakglen, its affiliates and / or their employees may have a position or holding, or other material interest or effect transactions in any securities mentioned or options thereon, or other investments related thereto and from time to time may add to or dispose of such investments. This document is intended only for the person to whom it is issued by Oakglen. It may not be reproduced either in whole, or in part, without our written permission. The distribution of this document and the offer and sale of the investment in certain jurisdictions may be forbidden or restricted by law or regulation. This communication does not constitute the solicitation of an offer to purchase or subscribe for any investment or service in any jurisdiction where, or from any person in respect of whom, such a solicitation of an offer is unlawful. Investments may have no public market or only a restricted secondary market. Where a secondary market exists, it is not possible to predict the price at which investments will trade in the market or whether such market will be liquid or illiquid. As such, for investments not listed or traded on any exchange, pricing information may be more difficult to obtain, and the liquidity of the investments may be adversely affected. A holder may be able to realise value prior to an investment’s maturity date only at a price in an available secondary market. The issuer of the investment may have entered into contracts with third parties to create the indicated returns and/or any applicable capital protection (in part or in full). The investment instrument's retention of value is dependent not only on the development of the value of the underlying asset, but also on the creditworthiness of the Issuer and / or Guarantor (as applicable), which may change over the term of the investment instrument. In the event of default by the issuer and/or Guarantor of the investment, and / or any third party the investment any income derived from such contracts is not guaranteed and you may get back none of, or less than, what was originally invested. Parties other than the Issuer or Guarantor (as appropriate) mentioned in this document (for instance the Lead Manager, Co-structurer, Calculation Agent or Paying Agent) do neither guarantee, repayment of the invested capital nor financial return on the investment product, if nothing is indicated to the contrary. Any capital protection given is usually an inherent part of the product; provided through the use of options, futures or other derivative products. You may have to accept smaller returns on an investment relative to a direct investment in the underlying index, basket, etc. because of the costs involved in providing the capital protection. Such capital protection normally only applies if the investment is held until maturity. The amount of initial capital to be repaid may be geared, which means that a fall in the underlying index or securities may result in a larger reduction in the amount repaid to investors. Alternative investments, derivatives or structured products are complex instruments that typically involve a high degree of risk and are intended for sale only to investors who are capable of understanding and assuming the risks involved. Structured products carry counterparty risk, in that in the event of default by the issuer you may lose some or all of your capital invested even when the product carries capital guarantees. Where this document relates to emerging markets, such investments should be made only by sophisticated investors or experienced professionals, who have independent knowledge of the relevant markets, are able to consider and weigh the various risks presented by such investments and have the financial resources necessary to bear the substantial risk of loss of investment in such investments. The services described are provided by Oakglen or by its subsidiaries and/or affiliates in accordance with appropriate local legislation and regulation. Certain products and services may not be available in all locations or to all Oakglen clients. Data Source: Oakglen Wealth (Jersey) Limited and Oakglen Wealth Limited, otherwise specified. Oakglen is a registered business name of Oakglen Wealth (Jersey) Limited and Oakglen Wealth Limited. Oakglen Wealth (Jersey) Limited is regulated in Jersey by the Jersey Financial Services Commission for the conduct of Investment Business and is a limited company with company number 121454, incorporated in Jersey on 7 June 2016. Its business address is 4th Floor, 1 IFC, St Helier, Jersey, JE2 3BX. Oakglen Wealth Limited is authorised and regulated by the Financial Conduct Authority. The registered address of Oakglen Wealth Limited is 30 Golden Square, London, United Kingdom, W1F 9LD and is registered in England and Wales with number 13182724.

All articles