As the Middle East conflict enters its fifth week, oil prices have continued to surge, with Brent crude approaching US$110-115 per barrel and West Texas Intermediate ( WTI ) nearing US$104, triggering the sharpest energy shock since 2022.

For context, it's worth noting that Brent hit US$139 in 2022 amid fears of supply disruptions following Russia's invasion of Ukraine. This time around, with the Strait of Hormuz still largely closed, many economists believe crude prices could spike well north of US$150. Hence, US$110 might actually be considered “resilient” rather than a total shock.

In any case, global markets are feeling the impact, with the S&P 500 posting its fifth straight weekly loss, the first such streak since 2022, while European indices rebounded modestly on hopes that higher energy costs would crimp growth and restrain central-bank tightening. Bond yields, after spiking, retreated as investors predicted slower economic growth.

Amid heightened geopolitical uncertainty, leading investors are not making big directional equity bets. Instead, they are pivoting towards thematic opportunities in energy security, supply-chain resilience, defensive fixed-income plays, gold, and selective emerging-market ( EM ) exposure.

The structural shift is clear in a new study by the Chartered Alternative Investment Analyst ( CAIA ) Association, The World Rewired, based on a global listening tour of 120-plus C-suite executives and a survey of its 14,000 members.

Regional perspective

Geopolitics has moved to the centre of investment decision-making, according to the study, with nearly two-thirds ( 62% ) of respondents looking to EM economies as critical for portfolio growth and diversification in a slowing world. About 16% of respondents cite EM economies as new talent sources and 10% as dominant private-capital providers.

“Capital markets are becoming more regional and policy-driven,” says Laura Merlini, EMEA managing director at CAIA Association. “Investors can no longer assume a single global rulebook.”

Lombard Odier has already acted. In its April 2026 Investment Strategy Monthly, the firm neutralized its global equity allocation and took profits on its overweight in EM equities, citing heightened Middle East tensions.

The Swiss private bank remains constructive on EM bonds, keeping sovereign bonds as least preferred, and holds a bullish stance on gold, expecting the dollar’s rally to fade. Within developed-market equities, Lombard Odier is neutral on the United States, negative on the United Kingdom, and retains its preference for Japan, as it searches for relative resilience.

In a research alert issued on March 31, Julius Baer echoes the caution while preserving selective convictions. Its base-case scenario ( >70% probability ) remains a short-lived but intense energy price spike, which it sees peaking in March-April before easing by summer.

Overweight India

An “enduring and chaotic” outcome of the war sits at up to 25%, and a full oil crisis below 5%, according to Julius Baer chief economist David Kohl, who also notes that tighter financial conditions – falling share prices, rising yields – are weighing most heavily on the US and Europe.

Julus Baer retains its overweight strategy on India, where large-cap stocks now trade at a 17.3X forward P/E, below their 10-year average, with 14.6% projected annual earnings growth through FY 3/2028.

Quality large caps in financials, consumption, IT, and export sectors are favoured. Emerging-market equities overall keep their “thesis intact despite war”, the private bank says, supported by resilient earnings, a softer USD outlook, and AI-driven capex in Asia.

Swissquote analyst Ipek Ozkardeskaya highlights the bond rebound, citing the fact that sovereign yields had climbed on inflation fears, but investors now see them as attractive because the oil shock will slow growth enough to limit aggressive rate hikes.

German CPI for March jumped to 2.7% year on year, driven by energy costs, although Federal Reserve chairman Jerome Powell has signalled that longer-term US inflation expectations remain “in check”. European stocks rose on the view that central banks may not tighten as much as priced, but Ozkardeskaya has warned the optimism may prove fragile, given higher operating costs ahead.

Multi-asset approach

BlackRock Investment Institute’s latest weekly commentary frames the shock as accelerating two mega-forces: geopolitical fragmentation and the transition to a low-carbon economy, as amplified by AI-driven power demand.

The near closure of Hormuz underscores widespread energy vulnerability – roughly 80% of the global population lives in net oil-importing countries. Rather than broad equity calls, BlackRock favours an active, multi-asset thematic approach: “electro tech” ( batteries, power electronics, electric motors ), energy infrastructure offering inflation-linked cash flows, critical minerals such as copper, nickel and aluminum, and defence.

BlackRock recently dialled down overall risk but stands ready to adjust. In fixed income, it likes short-term European government bonds as a cash buffer and emerging hard-currency debt tilted towards Latin American commodity exporters.

Coping patterns

Across these outlooks, several coping patterns emerge. First, scenario planning has replaced single-point forecasts; firms now stress-test for swift spikes versus prolonged chaos.

Second, thematic investing is gaining ground over traditional asset-class labels – energy security, supply-chain diversification, and AI infrastructure are seen as durable regardless of how the conflict resolves.

Third, defensive tilts – gold, short-duration bonds, quality large caps in resilient economies like India or Japan – provide ballast while growth risks mount.

Fourth, emerging markets are no longer just a risk but a potential source of diversification and returns, provided selectivity trumps broad exposure.

‘Wholesale rewiring’

The CAIA Association report captures the bigger picture: the global investment system is undergoing a “wholesale rewiring” as geopolitics, technology ( including tokenization ), and organizational capability converge. Firms are rethinking operating models, talent strategies, and leadership to navigate a multipolar world.

Only 20% of respondents in the survey feel “very confident” that their organizations can foster the innovation needed over the next decade. This underscores the fact that adapting to geopolitical uncertainty now requires more than portfolio tweaks; it demands institutional transformation.

For now, the message from asset managers is pragmatic humility: stay active, thematic, and diversified. The cost of standing still, as CAIA Association senior managing director John L. Bowman notes, “is rising fast”. With headlines still dominating price action, investors are bracing for volatility but positioning for the structural shifts the Middle East shock is accelerating.