ClearBridge touts infrastructure as haven amid Iran war

Binaya Dahal

Journalist

7 April 2026

Built-in inflation protection, regulatory oversight and long-term contracts make the infrastructure sector a safe haven for investors amid turmoil in the Middle East, according to ClearBridge Investments’ Portfolio Manager, Shane Hurst.

He said these features allow costs and inflation to pass through, supporting cash flows even if valuations face short-term pressure from rising interest rates.

“Many infrastructure assets operate under regulatory or contractual structures that enable inflation and higher input costs to be reflected in pricing over time,” Hurst said.

“That has allowed the sector to withstand, and in some cases grow through, periods of commodity-driven disruption.”

Hurst pointed to the North American utilities where regulatory frameworks help insulate operators from rising costs. “Cost-of-service regulation allows utilities to recover higher fuel and operating costs through customer tariffs, supporting earnings stability.”

He said that similar dynamics are at play in Europe, where policy settings bolster demand and regulation support pricing, which in turn helps sustain earnings even if inflation persists.

The shifting energy dynamics in Asia are also creating new investment opportunities with countries such as Japan and South Korea expected to increasingly source oil and gas from North America as they reduce reliance on Middle Eastern supplies.

“That strengthens the case for projects such as LNG Canada Phase II and the Trans Mountain expansion, and should drive higher volumes across pipelines, processing, and storage assets,” he said.

Hurst added while some infrastructure segments, such as airports face headwinds due to higher fuel costs, the long-term outlook remains constructive due to robust structural demand.

“Historically, air travel demand has been relatively inelastic to economic and price shocks, outside of extreme events such as COVID-19,” he said.

“Importantly, many airport revenues are either regulated or linked to inflation. Aeronautical charges are often set using CPI-linked formulas, providing a mechanism to pass through inflation over time.”