Now that you have that song stuck in your head, let's talk about how the current conflict in the Middle East could have a resounding impact on financial markets — much broader than what we've already seen. As always, we'll approach this purely from a financial perspective. Politics are what they are.

On February 28th, the U.S. and Israel took action against Iran after negotiations — including on nuclear matters — broke down. What happened next surprised everyone. Instead of a contained response, Iran directed attacks across the Middle East, striking civilian, government, military, and energy infrastructure in neighboring countries. They also threatened and attacked traffic in the Strait of Hormuz, bringing the flow of oil and critical resources to a near standstill.

The longer the flow of critical materials is throttled, the more stress it will create for the global economy. And this goes well beyond oil. Here are some of the less obvious areas being impacted.

Food Prices

If you have a black thumb like me (and especially my wife, Erica), you know you need as much fertilizer as possible to grow anything. The bad news is the cost of that fertilizer is going up — significantly — as a result of the war.

Roughly 20–30% of global fertilizer exports — including urea, ammonia, phosphates, and sulfur — normally pass through the Strait of Hormuz (IFPRI). One of the key elements in agriculture is nitrogen, which is derived in part from natural gas — a supply that has been materially disrupted. The longer this conflict goes on, the more expensive fertilizers will become. The ripple effect: lower crop yields and higher food prices.

The AI Buildout

For the past year or so, all we've heard about is the massive demand for computing power fueling the buildout of data centers around the world. This wave of investment has propelled the stock market to all-time highs, with companies betting that AI will have an impact not seen since the advent of the internet. So what does AI have to do with Iran? A lot.

To make AI work, you need hardware and power. The power impact is somewhat obvious — less global supply of oil and natural gas means higher energy costs. But the impact on hardware is less intuitive, and it runs through several critical materials.

Helium: Qatar produces about a third of the world's commercial helium, which is extracted as a byproduct of liquefied natural gas (LNG) processing (Scientific American). The conflict has hit helium from two directions: drone strikes forced the shutdown of Qatar's Ras Laffan facility — the world's largest LNG plant — and the Hormuz closure blocked the shipping route, taking roughly 5.2 million cubic meters of helium off the market each month (Data Centre Magazine). Helium is irreplaceable in semiconductor fabrication — it's used to control wafer temperatures during the etching process that creates the circuits on a chip. Morgan Stanley's head of Asia tech research noted this could ripple through power costs, materials supply, and the overall economics of building AI infrastructure (Technology Magazine).

Bromine: Around two-thirds of global bromine production comes from Israel and Jordan (CNBC). Bromine is used in the etching processes that cut circuit patterns into semiconductor wafers. With the broader regional instability, this supply is at risk as well.

Sulfur: This is the less obvious chain. About a quarter of global sulfur comes from Middle Eastern crude oil refining, and roughly half of all seaborne sulfur trade passes through Hormuz. Sulfur prices have nearly doubled since the conflict began (The Soufan Center). Why does that matter? Sulfur is a critical input for extracting copper and cobalt — two materials that form the backbone of modern technology infrastructure. Copper in particular is central to data center electrical systems, power distribution, and networking.

What does this all mean for financial markets? Markets are forward-looking, and a month ago, these supply disruptions were not priced in. Many large tech companies have seen their stock prices soar based on the presumption of continuous demand for — and delivery of — AI data center infrastructure. The more difficult and expensive that buildout becomes, the more likely stocks will need to reprice to reflect a more sobering reality.

Consumer Goods

If you've been to the gas station since the war started, you've probably noticed your wallet is a bit lighter. Especially if you're driving a diesel. U.S. diesel hit nearly $5.10 per gallon by March 19 — a 36% jump since the war started (AgriNews). That matters because, as one economist put it, pretty much everything you buy off a shelf is delivered by a truck that uses diesel — it's the mechanism that takes an energy crisis in the Middle East and feeds it into everyday prices (ABC News).

Fuel accounts for 50–60% of total operating costs for ocean shipping (PBS), so the impact hits both domestic trucking and international freight. Analysts expect retailers will absorb some of these higher transportation costs initially, similar to how many absorbed the impact of tariffs over the past year. But there's a limit. Many businesses have already burned through their margin cushion absorbing tariff costs, which means they have little room to also absorb a diesel shock (CNN). That's the compounding factor here — the diesel price surge may pass through to consumers faster than it otherwise would have.

What to Do About It

What makes navigating geopolitical conflicts so difficult is that they can be binary events. This could all end tomorrow, or it could escalate. The difference between those outcomes for financial markets is stark.

At Balanced Life Planning, we compare these situations to driving in cold weather. We know risk is out on the road — bridges ice before the road surface does. So when we approach a bridge, it's prudent to ease off the gas until we cross the bridge of uncertainty. Once we make it across onto more certain ground, we can reaccelerate. The risk of continuing at speed and getting into an accident far outweighs the few seconds you might save on your journey.

Have questions about how the current environment affects your plan? Let's talk. Reach out at info@bl-planning.com or call 859-287-4292.