Lloyd Blankfein, Senior Chairman and former Chief Executive Officer of Goldman Sachs, issued a warning on Wednesday, stating that the damage caused by the Iran war will persist for a considerable duration. He emphasized that even if an agreement were reached "by Thursday," the impacts would not dissipate quickly. Blankfein urged investors to prioritize contingency planning amidst the current turmoil.
Blankfein pointed out that market reactions to the conflict may be excessively optimistic or pessimistic, advising traders not to operate based on extreme assumptions that "everything will be resolved" or "it will never be resolved." The war, now in its fourth week, has caused severe disruptions to shipping through the Straits of Hormuz and triggered significant volatility in energy markets.
During the Asian trading session on Thursday, U.S. crude oil prices trended upwards, trading near $91.50 per barrel with an intraday gain of approximately 1.4%.
Blankfein's Core Warnings Blankfein stated on Wednesday, "People understand that even if the conflict stops tomorrow, the severe damage to infrastructure means the stress will last much longer. Even if a deal is reached on Thursday, there's no reason to assume an agreement will materialize tomorrow." He stressed that Iran's attacks on neighboring energy infrastructure and the blockade of the straits have inflicted lasting damage.
As a veteran who led Goldman Sachs through the 2008 global financial crisis, Blankfein noted that the pre-war investment environment featured "more tailwinds than headwinds"—characterized by robust economic growth and a declining interest rate path. However, these factors have now taken a backseat, with the war and energy prices becoming the dominant variables.
Impact of Energy Infrastructure Damage Since the U.S.-Israel strikes on Iran began on February 28, the conflict has rapidly escalated into a regional war. Iran's retaliatory strikes on neighboring energy facilities and the effective blockade of the Straits of Hormuz have significantly impacted global oil supply, causing sharp fluctuations in oil prices.
Blankfein indicated that the extreme volatility in energy markets reflects investors pricing in the long-term effects of supply disruptions. Even if a ceasefire agreement is reached, repairing infrastructure and restoring supply chains could take months or longer, which will continue to drive up energy costs and influence global inflation expectations.
Investment Strategy Recommendations Blankfein advised investors to avoid "conviction trades" and instead adopt a more cautious and flexible strategy. He stated, "You can set up hedges, but if the situation moves in the opposite direction, those hedges could become worthless by tomorrow."
He emphasized, "At this time, people should become excellent contingency planners. Be highly flexible and rigorously protect your positions." In an environment of heightened uncertainty, risk management is more critical than directional bets.
Valuation Risks in Private Markets Blankfein also raised concerns about the accuracy of portfolio valuations in private market funds. He noted that assets have not been sufficiently tested during the stock market's rise, stating, "A reckoning must occur—we haven't experienced one yet. The longer the interval before the reckoning, the more severe the potential consequences."
Outlook and Risks In the short term, the direct effects of the Iran war will continue to dominate markets, with energy price volatility, geopolitical uncertainty, and inflation pressures intertwined. Even in the event of a diplomatic breakthrough, the lag in infrastructure repairs will prolong the economic impact.
Blankfein believes the current environment demands that investors remain highly vigilant, prioritize capital protection, and prepare for multiple scenarios. In the long run, markets may gradually normalize after the war's resolution, but potential risks in private markets and fiscal conditions will require ongoing attention.
At 09:25 Beijing time, U.S. crude oil futures were reported at $91.41 per barrel.