US Lawmakers Hold as Iran War Draws Public Ire

Lead

One month after the initial escalation between the United States and Iran that began in late February 2026, U.S. lawmakers have not held a congressional authorization or substantive floor vote on the conflict, even as public disapproval has risen to levels that, by several polls, exceed 60% (Al Jazeera, Mar 28, 2026). The political stasis comes against a backdrop of tangible market moves: crude benchmarks have traded with elevated volatility, the national gasoline price average has ticked higher, and the VIX has re-rated equity risk premia higher relative to the first quarter of 2026. For institutional investors, the absence of legislative action is a non-trivial variable — it increases policy uncertainty while removing a discrete political catalyst that could otherwise crystallise an escalation or de-escalation pathway. This piece dissects the public opinion data, market signals and sector-level implications and offers a Fazen Capital perspective on potential second-order effects for portfolios and corporate risk management.

Context

The timeline is compact: hostilities between U.S. forces and Iranian proxies escalated in late February 2026, and by March 28, 2026 — one month into the confrontation — majorities in several national polls expressed disapproval of the conflict and concern over rising petrol prices (Al Jazeera, Mar 28, 2026). Congressional leadership in both parties has publicly affirmed differing policy objectives, but neither Republicans nor Democrats have coalesced around a single legislative path to authorize or restrict military actions. That legislative indecision contrasts with prior precedents: the 1991 Gulf War saw rapid congressional coordination on funding and resolutions, while more recent engagements (e.g., 2011 Libya, 2015 Syria) demonstrated elongated executive-legislative friction. The current impasse means the market is operating without a clear law-driven exit or escalation mechanism and must price risk primarily through real-time operational indicators and executive branch signals.

Domestic politics matter because they condition the probability of broader measures that affect markets directly — sanctions, energy export restrictions, and freight-mobility actions among them. The lack of a congressional vote effectively centralises discretion in the executive branch, which can be more nimble but less predictable; this is relevant for compliance officers, corporate treasury teams and risk committees that need to model regulatory pathways. For multinational companies with Middle East exposure, the current dynamic raises transaction frictions: insurers can re-price war-risk premiums, logistics managers can be forced to re-route, and energy buyers may need to accelerate hedging decisions. Policymakers’ unwillingness to act in the legislature also increases tail-risk scenarios, as executive decisions in crisis can occur with limited congressional oversight.

The international response is similarly muted in institutional terms. NATO and European partners have issued statements urging de-escalation, but there have been no binding multinational mandates that would change the operational calculus for shipping in the Strait of Hormuz or for regional energy infrastructure. In short, the environment is characterised by heightened public discontent, concentrated executive discretion, and market-sensitive operational indicators rather than by clear legislative outcomes.

Data Deep Dive

Specific market and public data points illuminate the current risk landscape. First, public opinion: multiple polls in late March 2026 registered majority disapproval of U.S. involvement, with one national survey conducted between March 20–25, 2026 showing 61% of respondents opposed to continued military engagement without a clearly defined objective (source: Al Jazeera citing national polling, Mar 28, 2026). Second, oil and fuel markets: ICE Brent crude closed near $89.45 per barrel on March 27, 2026, representing a month-to-date rise of roughly 4.2% and a year-on-year increase of approximately 9% compared to late March 2025 (ICE/Market data, Mar 27, 2026). Third, consumer fuel prices: the AAA national gasoline average increased to $3.52 per gallon on March 25, 2026, up $0.06 week-on-week and $0.28 year-on-year (AAA, Mar 25, 2026). Fourth, equity volatility: the CBOE Volatility Index (VIX) had spiked into the low 20s on several intraday sessions in March, up from the mid-teens at the start of February 2026, indicating a material re-pricing of short-dated equity tail risk (CBOE, March 2026).

These data points demonstrate transmission channels between geopolitics and markets. Oil’s yield — both price and volatility — remains a primary conduit to macro and sectoral effects, influencing inflation expectations, central bank policy signalling, and corporate margins within energy-intensive sectors. The move in gasoline prices, while relatively modest in absolute terms, has outsized political salience because changes at the pump are highly visible to consumers and can translate into consumer confidence adjustments. Elevated VIX readings reflect not only reaction to tail-risk but also hedging flows: institutional demand for protective options typically rises when policy clarity is low.

Comparative lenses sharpen the picture. Year-on-year, Brent’s roughly 9% appreciation contrasts with a commodity basket where industrial metals have been flat to negative in Q1 2026, and U.S. equities have outperformed many European peers, with the STOXX 600 trading approximately 6% below the S&P 500 on a year-to-date basis as of late March (Bloomberg composite, Mar 27, 2026). That dispersion underscores an allocation dilemma where energy and defence sector returns benefit from the geopolitical shock, while cyclicals with supply-chain exposure are penalised by higher input costs and logistical uncertainty.

Sector Implications

Energy: The clearest near-term beneficiary of the current geopolitical premium is the energy sector. Upstream producers can see margin expansion if Brent sustains above $85–90/bbl, and midstream companies may see shipping and storage demand pick up as trade routes are adjusted. However, inflationary pressures on refining margins and the potential for sanctions-driven supply shocks create a mixed risk-reward profile. Importantly, energy companies face higher security and insurance costs: war-risk surcharges for tanker voyages through the Gulf have reportedly risen, raising landed cost inflation for refined products in Europe and Asia.

Financials and insurance: Banks with significant trade-finance books and insurers underwriting marine and commodity risk are directly exposed to this form of uncertainty. Reinsurance capacity can tighten rapidly after high-profile incidents, pressuring premiums for marine hull coverage and cargo insurance. Financial institutions with counterparty exposure to commodity traders need to stress-test margin calls under larger price moves and spikes in volatility. For lenders, the political risk translates into credit stress scenarios for corporates that are both energy-intensive and narrowly profitable.

Defence and aerospace: Defence contractors typically see valuation re-rating when kinetic risk rises, but procurement cycles and fiscal constraints create execution risk. The current environment could accelerate near-term contract awards for force protection and logistics, but long-term government budgets remain contested. For investors, the sector’s sensitivity to legislative decisions is notable: procurement decisions can be fast-tracked via executive authorities without congressional appropriation, but the absence of sustained legislative support can constrain follow-through and create execution uncertainty.

Risk Assessment

The primary risk channels are escalation, supply-chain disruption and policy uncertainty. Escalation risk remains asymmetric: a limited exchange confined to proxy actors or targeted strikes is a distinct scenario from a broader regional conflagration that disrupts shipping in the Strait of Hormuz. Quantitatively, a supply shock that removes 3–4% of global seaborne oil flows would likely translate into a double-digit percent move in crude on short notice; contingency scenarios should incorporate both price and volatility jumps. Operationally, re-routing around the Cape of Good Hope or through longer European pipelines increases freight costs and delivery times, with knock-on effects to working capital and inventory management.

Sanctions risk is another vector. Secondary sanctions or targeted measures on shipping and insurance entities can create market segmentation, raising transaction friction for Western buyers while advantaging non-Western supply chains. For corporates, sanctions exposure requires rigorous sanctions-screening, contract flexibility clauses, and updated contingency playbooks. From a macro perspective, central bank responses to commodity-driven inflation will be pivotal — if CPI re-accelerates materially, the Fed’s path could shift, affecting rates-sensitive sectors and the U.S. dollar.

Political risk: The absence of a congressional vote reduces near-term legislative clarity but increases the persistence of executive-level discretion, which can lead to abrupt policy actions. For asset allocators, that translates into greater tail-risk allocation needs, scenario stress-testing and tightened risk limits on concentrated positions exposed to regional logistics. The historic comparator is the 2019 tanker-attack episodes in the Gulf, which produced a sharp short-term premium in crude but limited long-term structural price change; however, the interplay with public opinion in 2026 creates a distinct political feedback loop that could shorten or extend episodes of elevated volatility.

Fazen Capital View

Fazen Capital assesses the current stalemate in Congress as structurally increasing policy uncertainty rather than reducing it. While some market players interpret the lack of a formal vote as de-escalatory (absence of legislative momentum), our view is the opposite: discretion concentrated in the executive branch raises the probability of sudden policy shifts and executive-led actions without the predictability of legislative compromise. That increases the value of option-like exposures and the need for dynamic hedging strategies for institutional portfolios. For large asset managers and corporate treasuries, the immediate priority should be scenario mapping that combines plausible oil-price shocks (e.g., +15–25% on a regional closure) with simultaneous increases in shipping costs and insurance premia.

A contrarian, portfolio-level implication is that not all energy exposure benefits equally from a geopolitics-driven rally. Integrated majors with diversified refining and marketing operations may outperform pure upstream explorers because they can capture downstream margins and have scale to absorb insurance cost increases. Similarly, companies with long-term take-or-pay gas contracts or diversified LNG cargoing options may be better positioned than spot-dependent buyers. Fazen Capital therefore recommends institutional investors to differentiate between duration of exposure (short-term volatility vs structural supply shifts) and to prefer counterparty resilience when sizing positions in affected sectors.

We also highlight a non-obvious corporate risk: increased government scrutiny and potential retroactive regulation for companies perceived to profit disproportionately from crisis-driven price moves. Historical precedents — investigations into energy company trading practices during 2008–2009 volatility episodes — indicate that reputational and regulatory risks should be included in stress scenarios.

Bottom Line

One month into the Iran crisis, congressional inaction has not reduced market risk; rather, it has redistributed it to executive decisions and operational channels such as shipping and insurance. Institutional investors should prioritise scenario-based risk management that assumes higher short-term volatility and potential structural repricing in energy and logistics.

Disclaimer: This article is for informational purposes only and does not constitute investment advice.

FAQ

Q: How does the current political stasis compare to previous U.S. conflicts in terms of market impact?

A: Historically, conflicts with rapid congressional engagement (e.g., 1991 Gulf War) produced clearer policy trajectories that markets could price. In contrast, prolonged executive-legislative friction (e.g., 2011 Libya) generated extended uncertainty and higher realised volatility. The March 2026 episode aligns more closely with the latter pattern: markets face sustained policy ambiguity, which tends to elevate risk premia in energy, insurance and defence sectors.

Q: What are practical operational steps companies should consider that are not directly investment advice?

A: Practical steps include stress-testing supply chains for 5–20% increases in freight and insurance costs, reviewing contract force majeure and rerouting clauses, and updating sanctions-screening protocols for counterparties. Corporates should also maintain liquidity buffers to manage working-capital implications of longer delivery times.

Q: Could geopolitical risk lead to structural energy market changes?

A: While short-term price shocks are most likely, persistent disruptions could accelerate longer-term trends such as diversification of supply (LNG expansions, regional pipeline projects) and higher investment in strategic stockpiles. The scale of structural change depends on shock duration; transient episodes typically produce temporary reallocations, while multi-quarter disruptions catalyse capital allocation shifts.

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