Client Update - 13th March 2026

It will not surprise you that this week’s missive focuses on the ongoing conflict in the Middle East. Iran’s new supreme leader, Mojtaba Khamenei, has issued his first public statement calling for the Strait of Hormuz to “remain closed”, signalling a hardening of Iran’s strategy. He also warned that Iran would continue targeting US bases in the Gulf, despite intelligence sources suggesting he has already been injured during the conflict.

The closure of the strait—through which roughly 20% of global oil and liquid natural gas normally flows—has triggered the largest supply disruption in history, according to the International Energy Agency. Iraq has shut all its oil terminals after tanker attacks near Basra, and at least 18 commercial vessels have been hit since the war began. More than 110 tankers are now stuck in the Gulf.

Shipping companies describe their vessels as “sitting ducks”, with Iran expanding attacks beyond the strait itself. Naval escorts promised by the US are unlikely to begin before month end, and tanker operators doubt they will be effective given Iran’s drones, missiles, and seaborne capabilities. On Monday markets fell as interest rate rises were predicted in the summer to curb a spike in inflation due to energy process, and within 24 hours the opposite view was held as Trump announced the conflict was almost at an end. An hour later he changed his mind.

Oil markets reacted immediately as brent crude surged back above $100 per barrel, while equity markets weakened as the US administration continued to send mixed signals. President Trump emphasised that stopping Iran’s nuclear ambitions is a higher priority than oil prices, while also noting the US could benefit financially from higher prices as the world’s largest producer.

The disruption has created a dramatic shift in global energy flows as Russia has emerged as the biggest economic beneficiary, earning an estimated $150 million per day in additional budget revenues as India and China sharply increase purchases of Russian crude. If current conditions persist, Russia could gain $3.3–$5 billion in extra revenue this month alone.

This marks a striking reversal for Moscow, which had been struggling with low prices and reduced exports before the conflict. Ultimately Trump has given Russia an opportunity to regain influence in Europe and Asia, something of an own goal.

While the near term environment is volatile, several constructive themes emerge for diversified portfolios. Energy producers outside the Gulf—particularly in the US, Brazil, and parts of Africa—stand to benefit from sustained higher prices. Defensive sectors such as utilities and infrastructure offer relative stability during geopolitical shocks, and this is an area that we remain overweight in our own portfolios. Long term themes in energy transition technologies can only strengthen as governments seek to reduce reliance on chokepoints like the Strait of Hormuz.

Periods of geopolitical stress often create mispriced assets, and long term investors with disciplined allocation frameworks typically find opportunities once volatility stabilises and our investment team remain focussed on finding these opportunities as and when they arise. Our thoughts remain with anyone impacted by the conflict and it remains to be seen how long Trump can keep cool before focussing on the US mid-term elections and his ability to hold the House of Representatives and the Senate. Public support for US strikes on Iran is limited, even as Trump’s core MAGA base continues to back him, as rising oil prices and inflation are weighing on voter sentiment, creating political headwinds. For now, Trump has moved away from the “President of Peace” image he cultivated in earlier years. This shift may be costing him political capital, as he appears more willing to engage in military action than voters expected.

As always, we remain vigilant on your behalf, and I hope that this knowledge is reassuring. Do have a good weekend.