Economic Commentary

March 31, 2026

War Against Iran Spikes Geopolitical Risk

Geopolitical risks became the dominant driver of global financial markets during the first quarter following the U.S. war on Iran. The major theme impacting the economy in 2025 was the potential impact that higher tariffs would have on global economic conditions. The landscape changed dramatically following the start of the war as oil prices surged while global trade was disrupted. There has been a shift away from economic fundamentals driving global markets to geopolitical events now shaping the economic cycle. Despite President Trump initially stating that the war would be over in a short period of time, the conflict continues and has led to increased uncertainly and volatility in financial markets. The closing of the Strait of Hormuz has led to supply chain delays, contributing to increased shipping costs and slower global trade. Given that Trump has alienated many of his allies over the past year, there has not been coordinated support from many countries in the Iranian conflict.