US strikes Iran: What it means for Australian investors
An escalation of the Israel-Iran conflict has the power to impact both your share portfolio and your mortgage rate.
US President Donald Trump has posted on X (formerly Twitter) that the US has launched airstrikes on three Iranian nuclear sites, claiming the mission was successful.
While details are still emerging, US involvement in the Israel-Iran conflict has the potential to dramatically escalate tensions in the Middle East, driving up oil prices and global inflation.
— Donald J. Trump (@realDonaldTrump) June 21, 2025
Oil prices spike
With Iran being a major oil-producing nation, any confirmed strike on Iranian nuclear infrastructure could cause worsen supply fears.
Prior to US involvement, benchmark Brent crude oil had already risen around 20% in June, and is expected to rise further should conflict in the Middle East escalate.
An increase in oil prices would impact inflation, transport and manufacturing sections globally.
If oil infrastructure is hit or the Strait of Hormuz is threatened, prices could surge to US$130/barrel, according to analysts as Oxford Economics.
Also read: How to invest in oil
Interest rate outlook
Higher oil prices have a direct impact on inflation.
Central banks around the world, including Australia’s RBA, have been under pressure to cut interest rates amid signs that inflation is easing.
But if energy prices spike, headline inflation could rise again, delaying those rate cuts.
This puts both investors and households in a tough spot, as borrowing costs (including mortgage repayments) may stay higher for longer.
What this means for Australian investors.
For Aussie stock investors, the immediate impact may be felt in energy stocks, travel shares, and broader market sentiment:
Energy stocks such as Woodside (ASX: WDS) and Santos (ASX: STO) could benefit from rising oil prices.
Airlines like Qantas (ASX: QAN) and soon to be re-listed Virgin Australia (VGN), as well as consumer-facing sectors (like retailers and travel) may see shares fall due to rising fuel costs and shrinking margins.
Safe haven assets like gold may rise, benefiting gold miners such as Northern Star (ASX: NST) and Evolution (ASX: EVN).
Volatility ahead
If the strike is confirmed, we can expect volatility to remain high in coming days.
Traders may move capital into safer, defensive assets while global equities could face short-term pullbacks.
The ASX may open lower on Monday as futures point to risk-off sentiment.
What investors should do
Now’s not the time to panic, but it’s a good reminder to:
- Review your exposure to oil-sensitive sectors
- Keep an eye on currency markets and gold
- Maintain diversification in your portfolio
As always, geopolitical events tend to create short-term market movements. Long-term investors should avoid reacting emotionally and stay focused on fundamentals.
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