By Evie Liu

The Iran conflict could disrupt supply chains, increase energy and freight costs, and weaken consumer demand, putting pressure on U.S. consumer staples companies.

Still, RBC Capital Markets analyst Nik Modi expects consumer staples stocks to outperform in the near term as investors seek a haven amid broader market uncertainty.

Following the joint U.S. and Israeli strikes on Iran, several countries in the region shut down their airspace, sharply reducing global airfreight capacity.

Commercial ship traffic through the Strait of Hormuz also fell significantly after the strikes began. Iran has reportedly said ships are "not allowed" to pass through it and major shipping companies suspended routes in the Persian Gulf. Rerouting vessels around the Cape of Good Hope could add 10 to 20 days to transit times, driving up costs and delaying deliveries.

Disruption of the supply chain could make it harder for companies to get the raw materials they need and to deliver finished products on time, while higher energy and logistics costs could pressure margins, Modi wrote in a Monday note.

Although the Middle East accounts for only 2% of its total sales, Estée Lauder said in 2024 that disruptions in the region cut its earnings by 6 cents per share.

The analyst also noted that weaker consumer sentiment in Muslim-majority regions and potential boycotts against American companies could hurt sales. Mondelez, for example, said in 2024 that targeted boycotts in the region reduced its growth in the Asia, Middle East, and Africa market by about two percentage points.

Many staples companies have already faced weak demand and limited pricing power in the past few years, as lower- and middle-income consumers in the U.S. become more cautious with their spending. That makes sudden shocks like this harder to absorb, Modi said.

Historically, consumer staples stocks have shown mixed results during past Middle East conflicts. The State Street Consumer Staples Select Sector SPDR fund outperformed the S&P 500 by 7.3 percentage points in the 12 months after the Arab Spring began in December 2010, but has lagged behind by 9.5 percentage points since the Israel-Hamas war in Gaza started in October 2023.

Modi expects the sector to act as a haven in the near term, but the durability of that outperformance will depend on how long the conflict lasts and how severe the disruptions become.

Write to Evie Liu at evie.liu@barrons.com

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March 02, 2026 18:26 ET (23:26 GMT)

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