Goldman Sachs Former CEO Warns Iran War Damage "Will Last a Very Long Time," Hormuz Strait Scars Hard to Heal

Source: Huìtōng.com

Huìtōng Finance APP News — Senior Goldman Sachs Chairman and former CEO Lloyd Blankfein warned on Wednesday (March 25) that the damage caused by the Iran war “will last a long time,” and even if an agreement is reached “by Thursday,” it will be difficult to quickly eliminate the effects. He urged investors to prioritize emergency planning amid current turbulence.

Blankfein pointed out that market reactions to the conflict may be overly optimistic or overly pessimistic, and traders should not operate based on extreme assumptions that “everything will be resolved” or “will never be resolved.” The war has entered its fourth week, with serious disruptions in shipping through the Strait of Hormuz and sharp volatility in energy markets.

During Thursday’s Asian session, U.S. crude oil prices fluctuated upward, currently trading around $91.50 per barrel, up approximately 1.4% for the day.

Blankfein’s Key Warnings

On Wednesday, Blankfein stated: “People know that even if the conflict stops tomorrow, infrastructure has already suffered severe damage, and pressure will persist for a longer period. Even if an agreement is reached on Thursday, there’s no reason to believe there will be an agreement tomorrow.” He emphasized that strikes on Iran’s neighboring countries’ energy infrastructure and the blockade of the Strait of Hormuz have caused lasting damage.

As a seasoned leader who guided Goldman Sachs through the 2008 global financial crisis, Blankfein believes that the pre-war investment environment was characterized by “more tailwinds than headwinds” — with steady economic growth and declining interest rate paths. However, these factors have now taken a backseat, with war and energy prices becoming the dominant variables.

Impact of Energy Infrastructure Damage

Since the U.S. and Israel launched strikes against Iran on February 28, the conflict has rapidly escalated into regional warfare. Iran’s retaliation against neighboring countries’ energy facilities and the de facto blockade of the Strait of Hormuz have caused significant disruptions to global oil supplies, leading to volatile oil prices.

Blankfein pointed out that the sharp fluctuations in energy markets reflect investors’ pricing of the long-term impacts of supply disruptions. Even if a ceasefire is reached, infrastructure repairs and supply chain recovery will take months or longer, continuing to push up energy costs and affecting global inflation expectations.

Investment Strategy Recommendations

Blankfein advised investors to avoid “conviction trades” and adopt more cautious, flexible strategies. He said, “You can hedge, but if the situation turns in another direction, these hedges could be worthless tomorrow.”

He emphasized: “At this time, people should be excellent emergency planners. Be very flexible and strictly protect your positions.” In an environment of increasing uncertainty, risk management is more important than directional bets.

Private Market Valuation Risks

Blankfein also questioned the accuracy of private market fund valuations. He pointed out that assets have not yet been thoroughly tested during the stock market rally, “a liquidation is necessary — we haven’t experienced one yet, and the longer the interval between liquidations, the more severe the potential consequences.”

Outlook and Risks

In the short term, the direct impact of the Iran war will continue to dominate markets, with energy price fluctuations, geopolitical uncertainties, and inflationary pressures intertwined. Even if diplomatic breakthroughs occur, delayed infrastructure repairs will prolong economic impacts.

Blankfein believes that the current environment requires investors to stay highly alert, prioritize capital protection, and prepare multiple scenarios. In the long run, markets may gradually recover after the war is resolved, but potential risks in private markets and fiscal conditions should remain closely monitored.

As of 9:25 Beijing time, U.S. crude oil is trading at $91.41 per barrel.

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Editor: Jiāng Yùhán