02-03-2026 • Insight

Middle East conflict: Market commentary

Welcome to our blog with in-depth analysis and reactions as the impact of the conflict in the Middle East continues to unfold. This is an evolving situation carrying a great deal of uncertainty as the extent and duration of the conflict is yet unknown. Our aim is to keep you informed of our views as events develop.

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MONDAY, MARCH 2

11:30 CET
Fixed Income perspectives on the Middle East conflict
By Martin van Vliet, Fixed Income Strategist
Recent developments in the US-Iran conflict have triggered a flight to safety response across markets, with a muted impact on fixed income markets thus far. Oil and gas prices rose sharply, while US 10 year Treasury yields declined in the days leading into the crisis. The decline in Treasury yields reflects risk aversion, with investors rotating into intermediate maturity sovereign bonds.

Credit markets have repriced modestly but in an orderly manner, consistent with a broader risk off environment rather than systemic stress. The key macro risk lies in commodities, particularly with the effective disruption of shipping through the Strait of Hormuz – a critical artery for oil, LNG and fertilizers – which could have wider implications for inflation and policy if prolonged.

Against this backdrop, portfolios remain balanced, with credit risk close to neutral, and an overweight in duration in Europe. EMD strategies reduced exposure to the Middle East ahead of the conflict but retain selective overweights in rates markets like Brazil, Mexico, Peru or credits like Argentina, Ghana and Ecuador.

MONDAY, MARCH 2

11:15 CET
Iran conflict implications for the global economy
By Michiel Plakman, Lead Portfolio Manager and Co-Head Global Equity

The key question for the global economy remains whether the Strait of Hormuz could be effectively closed for oil and gas exports for more than a few weeks. A prolonged disruption would hurt global growth and raise inflation noticeably. For example, a sustained rise in the oil price by USD 15 per barrel could lift the level of US consumer prices by almost 0.5% and curtail gains in disposable incomes accordingly.

Oil prices have risen nearly 8% so far, but history suggests such spikes are typically brief. Past incidents in the Middle East (e.g. the 2019 Houthi attack on Saudi facilities) saw production restored quickly and prices fully reversed. Notably, the current move is more contained than the 15% overnight surge seen in the Houthi example. The market appears to be pricing in de-escalation, particularly in light of President Trump’s indication that any conflict would not last “longer than a few weeks,” which is helping keep risk sentiment contained.

We would expect President Trump to go to great lengths to prevent a lasting surge in energy prices that could hurt him domestically ahead of the US mid-term elections in November. US voters have already blamed him for high consumer prices prior to the strikes against Iran. He may use US military might to prevent a prolonged closure of the Strait of Hormuz, negotiate with Iran, and/or ask other oil exporters to raise supplies to offset any drop in Iranian exports.

Over the next few days, we will monitor whether operating routes normalize. The outlook for Iran itself remains highly uncertain, with a wide range of potential political outcomes: the old regime under new leaders, regime change, prolonged unrest, or even civil war? Longer term, Iranian oil exports might even rise under a new regime and/or a deal with the US.

Portfolio implications
We are likely to increase our weight in the energy sector further. At this stage, we do not see any other immediate impact on our portfolio positioning.

We continue to focus on identifying high-quality companies that trade at a meaningful discount to their intrinsic value – businesses with durable fundamentals that are well-positioned to withstand a challenging macroeconomic environment in the medium term.

MONDAY, MARCH 2

11:00 CET
Reaction to Iran conflict from Robeco EM Fundamental Equities team
By Jan de Bruijn, Client Portfolio Manager
The US and Israel’s coordinated large scale strikes on Iran since 28 February have drawn significant response from Iran, closing airspace in the Middle East and impacting commercial shipping in the Arabian gulf. Both nations’ governments framed the operation as a pre emptive move to blunt emerging threats, while US officials signaled a desire to encourage internal political change within Iran. With reciprocal strikes continuing, the near term outlook remains volatile, and diplomatic efforts have yet to establish any meaningful stabilization pathway.

This escalation introduces a significant geopolitical shock with implications across asset classes. Elevated uncertainty has generated immediate risk off in equity markets with the MSCI Emerging Markets Index down 1.8%, MSCI Asia Pacific Index down 1.8%, Stoxx Europe 600 down 1.8% and in the US S&P 500 futures down 1.5%.* Commodities were broadly higher with Brent crude oil up 9.6% at USD 76.9 per barrel and Gold up 2.5% at USD 5,410 per ounce.

A prolonged conflict will increase the risk of new sanctions, maritime restrictions, and rapid shifts in Western security postures, all of which could affect capital flows and cross border trade dynamics. Clients should expect short term volatility and be prepared for scenario driven swings in global risk sentiment.

Energy equities are positioned at the center of this shock. Crude prices are likely to remain elevated due to heightened supply disruption risk, especially given Iran’s strategic position near the Strait of Hormuz, one of the world’s most critical oil transit corridors, which is de facto closed at the time of writing as marine insurers have withdrawn coverage. Crude oil exports from Saudi Arabia’s Ras Tanura sea island remain normal but the question is whether the cargoes will be able to exit the gulf.

Fund positioning:
The Gulf Cooperation Council (GCC – political and economic alliance of six Middle Eastern countries: Saudi Arabia, Kuwait, Oman, Qatar, UAE & Bahrain) accounts for 5.6% weight in the MSCI EM Index (as at 31 January 2026). All Robeco Emerging Markets strategies are underweight the region with the only overweight being in UAE.
Both flagship funds are somewhat underweight the oil and gas sector but given the uncertainties surrounding events, we will closely monitor the situation as it unfolds.

*Source: Bloomberg 0943 CET, 2 March 2026