The Iran crisis is not only driving up the price of oil, the risk of stagflation is also growing. This affects the portfolio.
• Middle East crisis drives inflation
• The risk of stagflation also increases
• Negative consequences for the portfolio
The war in Iran is driving up the price of oil enormously. Given current developments, the likelihood of so-called stagflation – the combination of high inflation and weak growth – is increasing.
Inflation is picking up
Due to the blockage of the Strait of Hormuz, which is important for global oil and gas trade, not only are prices at gas stations rising, but numerous industrial products are also becoming more expensive. This is because oil is also used to make plastics and packaging. Even food is becoming more expensive because transport costs are increasing.
Where possible, companies pass on the higher costs to customers. In Germany, for example, this was already noticeable in March 2026, with the inflation rate catapulted to 2.7 percent, the highest level since January 2024, according to the Federal Statistical Office.
Weak economic growth
The declining purchasing power of consumers as a result of inflationary pressure ultimately puts a strain on companies’ sales and profits. The problem is made even worse by the fact that central banks tend to be reluctant to cut key interest rates in times of high inflation, so little support can be expected from this side to stimulate the economy.
Implications for investors
These are difficult conditions for investors. On the one hand, inflation reduces the real return on the portfolio. For example, if an ETF portfolio grows six percent but inflation is three percent, there is significantly less left over in real terms.
On the other hand, weak corporate results are generally negative for the stock market. “Based on data since 1926, the average real annual return in a stagflation year was around zero percent. That is less than investors expect from stocks in the long term,” Duncan Lamont, head of strategic research at Schroders, is quoted by “extraETF”.
Delayed response from investors
As “extraETF” further explains, the effects of rising oil prices do not become apparent immediately, but often with a time delay. As a result, many private investors only react when they feel the higher prices for goods and services, but the markets have long since adjusted. Ultimately, this means that decisions are often made at an inopportune time.
Thomas Zoller, editorial team at finanzen.net
