Trump did not opt for a "quick victory"! Global markets are facing the "Iran shock," and the focus is on "duration."

Trump did not opt for a "quick victory"! Global markets are facing the "Iran shock," and the focus is on "duration."

“Trump says he won’t stop fighting until his goals are met! Iran says the ceasefire will be decided by Iran.” The latest standoff statements from both sides have completely shattered the market’s expectation for a quick resolution.

According to CCTV News' latest report, US President Trump delivered a video address on March 1, local time, stating that the US and Israel will continue military actions against Iran until all objectives are achieved. Iranian Foreign Minister Aragchi said that Iran will decide when and how this US-Israeli imposed war will end.

Trump’s latest statement is a clear escalation from earlier. Recently, Trump claimed that Iran "is a major country," and that US military action might take about four weeks to complete, or less. Additionally, regarding the conflict, Trump stated the US military has sunk 9 Iranian ships and has "basically destroyed Iran’s naval headquarters." The US military claims to have destroyed the Iranian Islamic Revolutionary Guard headquarters and denies that the USS Lincoln aircraft carrier was hit by Iran. The Iranian Revolutionary Guard claims its counterstrike has "caused 560 US casualties" and has shot down more than twenty US-Israeli drones.

As the conflict’s time span extends, Wall Street’s pricing logic changes instantly. Goldman Sachs warns in its latest research that the "duration" of the conflict has replaced its "outbreak" as the key variable determining the trajectory of crude oil, gold, and US stocks.

Strait of Hormuz: “Actively Avoided,” Not “Forcefully Closed”

After the conflict erupted, global attention focused on the "throat" of the oil market—the Strait of Hormuz. This narrow waterway in southern Iran is the chokepoint for around 20% of global oil transportation.

Bloomberg opinion columnist Javier Blas pointed out that despite extreme market panic, a key fact must be clarified: shipping disruption in the strait is the result of "commercial fear," not a "physical blockade." But from a macroeconomic perspective, the energy market picture is not out of control.

“Iran has not weaponized oil nor closed the strait. Nor have Israel and the US attacked Iran’s oil infrastructure.” Blas analyzes that the current sharp decline in shipping volume is more a "self-imposed" pause by the market. At this stage, he describes the situation in two layers:

  • Significant decline in shipping volume: He writes that shipping traffic "has declined sharply," but a few oil tankers are still "passing safely overnight."
  • There is no factual "closure" of the strait: "Despite sensational claims across social media, Iran has not closed the strait."

Blas further adds, the current partial stoppage more resembles a "self-imposed" pause—on one hand, insurers withdraw coverage, on the other, the industry paused "at the request of the US Navy in the initial hours of the conflict." He also notes some buffer from pre-attack early shipments: "February Persian Gulf crude exports were nearly 10% higher than last month," with many cargos already left the region. But he warns that if Washington does not quickly reassure shipping companies of strait security, the "self-imposed pause" may develop into a real supply disruption.

Blas believes that when markets reopen, oil prices could jump 10%-15%, and Brent crude may reach above $80 per barrel. However, due to the US shale oil revolution and adequate supply, the global economy may not be severely impacted.

The two biggest current market worries—systematic attack on energy infrastructure and forced disruption of tanker routes—"have not happened, at least not yet."

Goldman Sachs: Duration of Conflict Will Determine Asset Trajectory, Possible Repeat of “2022 Playbook”

If the Strait of Hormuz determines the magnitude of short-term price jumps, then "duration" determines the asset pricing paradigm. Goldman Sachs strategy team writes in its latest report that only if oil supply disruption shifts from a "brief spike" to a “prolonged blow,” will the market suffer substantive damage.

Goldman especially warns investors to beware the return of the “2022 energy shock playbook,” which is far more dangerous than simple oil price increases: the current macro environment is strikingly similar to early Russia-Ukraine conflict in 2022, perhaps even trickier.

  • Stronger inflation stickiness: Unlike a few years ago, the structural dynamics of baseline inflation have shifted.
  • Dual drivers—fiscal & AI investment: US fiscal spending remains elevated, combined with massive AI infrastructure demand, keeping inflation expectations high.
  • Dilemma for central banks: If a lasting, "cost-push" energy inflation breaks out, this compounded effect will lock the Fed’s rate-cut space. Goldman warns, if supply shocks persist, the market won’t be able to ascertain mid-term rate direction, leading to a sharp rise in rate volatility rather than simple rate moves.

Goldman’s asset outlook:

Oil: Worst-case scenario is “sustained complete interruption” of Hormuz oil flow

Goldman says its commodity team’s key risk scenario is the "most disruptive"—a “sustained complete interruption” of oil flows through Hormuz. The report also notes, “these disruptions are already starting,” but the core issue is “how long they might last.”

This matches Bloomberg’s market focus: even with opening oil-price spikes, what truly determines volatility longevity is strait passage, insurance & shipping recovery, and whether energy infrastructure sees further attacks.

Gold, Silver, Copper: Goldman models a “+10% price jump” scenario

The report uses its GSTOT framework to gauge commodity shock spillover and models a scenario where gold, silver, copper and oil prices each rise another 10%. Goldman emphasizes: if commodity shocks are “more lasting,” allocation effects may “re-emerge” in the market.

For gold, silver, copper, Goldman suggests two points:

  • If commodity price jumps shift from “brief spike” to “sustainable upward move,” asset pricing weights shift from pure hedging to a more complex “inflation-growth-allocation” mix;
  • In this scenario, market distribution widens, trading volatility and hedging demand won’t easily return to pre-conflict norms.

US Stocks: Mostly Negative; “Significant Consequences” Require More Extreme, Prolonged Oil Supply Disruption

Goldman writes, for equities and credit, such risks and growth shocks are "clearly negative"; but only "severe and sustained" oil interruptions (like 1990 or 2022) will heavily impact the global growth outlook.

Sectors and styles: Goldman outlines a clear differentiation path:

  • "Cyclical industries" may be pressured, especially consumer-facing sectors (including airlines) and heavy industrial oil users;
  • Energy producers will outperform;
  • Some cyclical sectors and markets that surged early this year may be more vulnerable due to “position adjustments.”

FX Market: Dollar & Yen Preferred as Safe Havens

In FX, negative supply shocks and growth risks will initially drive terms of trade allocation effects. The report says: “In a cooling risk environment and rising oil prices, the dollar and yen may be the preferred safe-haven assets.”

US Treasuries: Supply-driven oil price rise may lead to “front-end harder to cut, yield curve flattens”

In rates, Goldman highlights the tug-of-war between “inflation up, growth down.” Historical data shows: a 10% oil price rise typically pushes 2-year breakeven inflation up 15–20bp; 2-year nominal yields less affected, rising 5–10bp.

Traders should focus on curve shape. Goldman writes, compared with rate direction, supply shocks more often “flatten the front-end": inflation limits short-term rate cuts, while growth risks tug at longer maturities. Thus, Goldman says, the recent “front-end flattening, 5-year segment outperformance” trend in the US curve may persist initially.

Goldman warns, if markets start pricing higher "prolonged conflict" odds, volatility jumps may pressure swaps and spread trades; overall, the short end faces greater rate volatility.

Europe faces hawkish risks

In Europe, while high energy prices bring negative trade shock, German fiscal expansion is entering the real economy.

Goldman says: “This combo gives the euro curve’s front-end hawkish risk, though in line with historical trends, it may flatten the curve because negative risk sentiment anchors long-term yields.”

Given lessons from the 2022 energy shock, if cost-push inflation persists, higher fiscal spending may boost inflation expectations. This makes it harder for markets to form a clear mid-term rate outlook, and instead points to higher rate volatility.

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