Wall Street pros are getting increasingly nervous about Iran

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• Wall Street experts are warning that markets are underpricing risks from the Iran war and oil shock.

• Stocks are holding up, but oil swings and weak haven demand signal complacency.

• The experts say a prolonged conflict could hit growth, lift inflation, and jolt equities.

Wall Street pros are getting increasingly nervous about Iran and warning that markets may be too complacent.

Nearly a month into the conflict and the closure of the Strait of Hormuz, the S&P 500 is down about 4%, while traditional safe havens like gold and Treasurys have struggled to rally.

Oil has been far more volatile. Brent and West Texas Intermediate crude surged as much as 80% at one point to nearly $120 a barrel, though both grades have since pulled back below $100.

That relatively muted cross-asset reaction has raised concerns that investors are underestimating the potential fallout from the Middle East crisis.

Here’s what top investors are saying about the market’s reaction.

Rob Kapito

BlackRock president Rob Kapito warned that investors may be underestimating the risks tied to the conflict, as markets appear to be pricing in a relatively benign outcome.

“What if this disruption is a week, six months, a year — what is it going to mean for the companies that I own?” Kapito said at the Asia Pacific Financial and Innovation Symposium in Melbourne, per Bloomberg.

He cautioned that even a swift end to the conflict may not prevent economic damage. Growth could slow by as much as two percentage points, while inflation may rise by a similar margin.

Kapito also flagged the risk of an oil spike, saying prices could climb as high as $150 a barrel as supply chains take time to recover.

Bob McNally

Oil prices have risen sharply since the war broke out, but they may have much further to climb, energy consultant Bob McNally told Business Insider’s Jennifer Sor.

McNally, the president of Washington, DC-based Rapidan Energy Group and a former White House energy advisor in the George W. Bush administration, said investors are underestimating what he sees as one of the most significant energy disruptions in history.

He argued that markets appear overly reliant on temporary fixes, like tapping strategic reserves, while recent price action suggests traders have grown complacent after a string of short-lived oil shocks.

“This is a market that wants to believe it’s going to end,” McNally said. “It’s like a nightmare that they thought was impossible.”

But this time could be different, he warned. Crude prices could surpass their 2008 record high of $147 a barrel if the conflict continues along its current path, McNally said.

Nohshad Shah

Citadel Securities says the Iran war is more complex than markets are pricing in, warning that investors may still be underestimating the potential fallout.

Nohshad Shah, the firm’s head of EMEA fixed income sales, said recent market behavior suggests a degree of complacency toward escalating geopolitical risks.

“Investors have been accustomed to fading geopolitical shocks in recent years and have been relatively sanguine about the impact of this current war,” Shah wrote in a March 23 note. He warned that such positioning rests on a “miscalculation.”

He said investors appear to assume the conflict can be resolved quickly, but that overlooks the structural differences between this war and past market-moving events.

Unlike Trump’s sweeping tariffs last year — which could be reversed unilaterally — the Iran conflict involves multiple actors, making a quick resolution less likely and the fallout more prolonged.

JPMorgan

JPMorgan analysts lowered their 2026 year-end S&P 500 target to 7,200 from 7,500, warning that investors are growing complacent about the risks tied to higher oil prices.

The bank said last week that current market pricing rests on a “high-risk assumption” — that the Middle East conflict will end quickly and the Strait of Hormuz will reopen, limiting any hit to demand.

“We believe the market is pricing in a quick end to the Middle East conflict and reopening of the Strait, giving a low probability to a potential demand hit,” the analysts wrote, noting that stocks and oil tend to move more negatively in tandem after a sharp price spike.

JPMorgan added that investors have been hedging rather than fully derisking. While some speculative pockets — including software, South Korean equities, and crypto — have pulled back, broader complacency remains.

The bigger risk, the bank said, is not just inflation from higher oil prices but the potential drag on demand if the Strait remains closed.

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