Last Saturday, 28 February 2026, the US and Israel launched a joint major attack on strategic targets in Iran. The targets were military installations, nuclear infrastructure and the whereabouts of the leadership. Key figures in the mullah regime were killed, including revolutionary leader Ayatollah Ali Khamenei, the defence minister and the head of the Revolutionary Guards. Iran has since responded with counterattacks on Israel and US bases in the Gulf region. Seven Gulf states were hit, including Dubai Airport. Air traffic in the Middle East has been largely paralysed.
The further course of the conflict is unclear: US President Trump is likely to seek a quick ceasefire, while it remains unclear whether a capable leadership will form in Iran in the short term. At the same time, Khamenei's death could cause the conflict to spread to several countries in the region. In addition, the regime could collapse internally in the medium term, with consequences for the stability of the 90-million-strong state.
The global economic consequences are initially concentrated on the energy market. The Strait of Hormuz, through which around 20 per cent of the world's traded oil flows, is currently impassable, and the price of American WTI crude oil has already climbed by around 7 per cent to 72 US dollars since Friday. The price of heating oil has risen by as much as 14 per cent. Regardless of how the conflict develops, it can be assumed that the price of oil will remain high for the time being and will push global inflation up slightly. If the conflict continues, this is also likely to have an impact on global growth in the medium term, especially as Asian economies are much more closely intertwined with the Middle East than Western countries and have recently been a key pillar of the global economy.
The reaction on the financial markets was immediate, but with the exception of the oil price, it has been remarkably moderate so far. Gold rose by 2 per cent to 5,400 US dollars per troy ounce, while government bonds recorded slight price gains. Equities were on the losing side, with markets in Asia and Europe opening around 2 per cent lower.
The moderate overall reaction suggests that many market participants assume that this will be a temporary conflict with equally limited effects. We believe this assessment to be too short-sighted. Firstly, the signal effect of this attack should not be underestimated: the fact that such a pre-emptive strike is possible is likely to lower the threshold for similar actions by other countries and point to structurally higher geopolitical uncertainty that extends beyond the Middle East. In the medium term, this suggests a more challenging economic environment.
Against this backdrop, a cautious stance remains appropriate. Our underweight position in equities and overweight position in gold continue to appear appropriate. Broad diversification and a long-term investment strategy remain the central pillars of our asset allocation and cushion temporary market distortions.
We are closely monitoring further developments and will inform you promptly of any significant changes.
