BlackRock President Rob Kapito stated that investors may be underestimating the risks posed by the conflict involving Iran. Even if the conflict ends quickly, these risks could weigh on economic growth and push inflation higher.

Kapito warned at the Asia-Pacific Finance and Innovation Symposium in Melbourne on Thursday that even a swift end to the war could reduce economic growth by as much as two percentage points, while inflation could rise by a similar margin.

Even if "we announce the war is over tomorrow," oil prices could still surge to $150 per barrel, as disrupted supply chains would take time to return to full capacity.

"What does this disruption mean for the companies I own if it lasts one week, six months, or even a year?" he said. "My biggest concern is that people are not facing this issue; they are just blindly assuming" an optimistic outcome.

At the same event, Apollo Global Management President Jim Zelter also cautioned that a prolonged conflict would increase the risk of a U.S. recession and threaten the credit cycle.

These warnings highlight growing concerns that markets have become too complacent about the economic fallout from the conflict, particularly the risk of prolonged disruptions to energy and shipping, which could ripple through global supply chains.

Kapito noted that in the past, "when such conflicts occurred, investors would buy short-term U.S. Treasuries, gold, and short the stock market." However, the current market reaction to the war has been inconsistent, with stocks declining only modestly while gold and Treasuries have also fallen.

Zelter pointed out that the U.S. consumer, which has been a pillar of the economy in recent years, is now showing signs of strain. He said consumer confidence has weakened in the first two months of the year, and rising oil prices will further burden household budgets.

"This is not really an interest rate shock, but a shock to the confidence of consumers in the world's largest economy," Zelter stated.

Despite the potential for slower growth and higher inflation due to the conflict, Kapito remains optimistic about the long-term outlook, highlighting that themes such as the rise of artificial intelligence and private markets will provide significant support for investors.