Janus Henderson’s Adam Hetts considers what’s ahead for markets as Iran conflict escalates

Janus Henderson is urging investors to stay measured after US-led military action in Iran jolted energy markets and revived geopolitical uncertainty.

In a first reaction, Adam Hetts, Global Head of Multi-Asset at the firm, said the market response so far reflects expectations for a contained episode rather than a drawn-out crisis.

“US-led strikes in Iran have pushed oil prices higher and reignited geopolitical risk. Our view: markets are pricing a limited conflict, with broader investment implications still manageable unless escalation proves prolonged. As always, diversification and a long-term perspective matter most when uncertainty peaks.”

Energy markets reacted immediately. Iran accounts for roughly 3% to 4% of global crude output, but the broader regional fallout is already rippling through supply chains. Most notably, shipping activity through the Strait of Hormuz — a critical chokepoint that carries about one-fifth of the world’s oil — has effectively stalled following the strikes.

Brent and WTI crude, which had largely traded between $60 and $70 per barrel over the past year, have now pushed above $70 and appear set to climb further as trading resumes.

Even so, Hetts suggested the move remains within the bounds of a historically limited conflict.

“Prices have moved higher, but current levels still point to a limited, short-lived conflict rather than a sustained energy shock,” he said.

Hetts noted that oil reaching $80 per barrel would resemble price action during the 12-day Israel-Iran war in June 2025, while $90 would echo April 2024’s flare-up — both episodes that global markets absorbed without lasting damage. By contrast, Russia’s invasion of Ukraine in early 2022 drove crude above $100 for an extended stretch, briefly topping $120, a dynamic more consistent with a major, prolonged conflict.

For now, he said, energy markets are not signaling that kind of sustained disruption.

Escalation is the swing factor

Diplomatic efforts between Washington and Tehran over Iran’s nuclear program had deteriorated in recent days before joint U.S. and Israeli strikes targeted strategic sites across Iran.

Iran has responded with attacks throughout the Middle East. Reports indicate that Iran’s supreme leader, Ayatollah Ali Khamenei, is among those killed, raising the risk of a broader regional escalation beyond the shorter conflicts seen in April 2024 and June 2025.

The key variable for investors, Hetts said, is duration.

“Broader market impact hinges on escalation: Risk assets, inflation expectations, and rate outlooks would only shift materially if uncertainty proves prolonged,” he said.

Should tensions drag on, investor sentiment could sour more broadly, weighing on equities and other risk assets. In that scenario, flows would likely rotate toward developed-market sovereign bonds, including US Treasuries, along with traditional safe-haven currencies.

A sustained rise in crude could also rekindle inflation concerns globally, potentially complicating the US Federal Reserve’s expected path toward rate cuts later this year.

Avoiding reactive moves

Depsite the potential risk, Hetts emphasized that a dramatic repricing across asset classes would require a deeper and longer-running conflict than what markets are currently discounting.

“At this stage, this is not our base case,” he said, cautioning that the immediate aftermath of such events typically brings “a jarring set of headlines” and what could amount to peak uncertainty.

For advisors and investors, the prescription remains unchanged.

“Elevated uncertainty argues for diversification and a long-term mindset, not reactive portfolio changes.”

That means maintaining balanced exposure, including high-quality defensive assets designed to buffer volatility, while resisting the urge to time geopolitical shocks.

As Hetts put it, staying invested through turbulence — and keeping sight of durable, secular growth themes — is more likely to serve portfolios than chasing short-term moves driven by headlines.