What other variables are there in the Iran conflict?

What other variables are there in the Iran conflict?

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On February 28, the joint military strike launched by the United States and Israel against Iran completely ignited the geopolitical powder keg of the Middle East. After the news of Iranian Supreme Leader Khamenei’s death was confirmed on March 1, gold and oil prices today staged a classic “surge and retreat,” with the market reaction relatively restrained.

On March 2, Dongwu Securities stated in its latest research report that the current macro main line is clear: In the short term, the market will follow the trading logic of “risk aversion first, easing later.” However, the shipping status of the Strait of Hormuz, whether the United States will be drawn into ground warfare, and power transitions within Iran remain the three major tail risks hanging over the market.

Specifically, if the Strait of Hormuz is effectively blocked, global oil prices may surge past $100 in the short term; if the United States is forced into a prolonged ground war, it will face oil price spikes, forced interest rate hikes, and backlash from consuming national power; power vacuum and changes within Iran will directly determine whether the conflict further escalates.

Dongwu Securities believes that in the long run, the frequency and intensity of global geopolitical conflicts are increasing, and gold and oil are increasingly valuable as strategic hedging assets for foundational allocation.

Geopolitical Storm Center: Baseline Projections and Three Major Variables of the US-Iran Conflict

The research report points out that Trump’s “strike to promote talks” approach has shown initial results, but the risks of the Strait of Hormuz and prolonged war are still the Damocles sword over the market.

In the February 28 military action, Trump announced the launch of the “Epic Fury” operation aimed at destroying Iran’s missile industry, controlling the Strait of Hormuz, and “zero tolerance” for nuclear facilities; Iran responded with “True Commitment-4” by launching hundreds of missiles and drones in restrained retaliation.

Dongwu Securities states that currently, the market expectation probability for a ceasefire before April is as high as 64%. In the baseline scenario, after successfully carrying out a “decapitation strike,” Trump has taken the initiative, and the two sides are highly likely to repeat the model of the June 2025 twelve-day war between Israel and Iran, announcing victory after limited air strikes to placate domestic politics.

The report expects that under the baseline scenario, both sides will likely keep the conflict within limited air strikes, with the situation expected to cool down in 2-3 weeks. At that time, risk aversion sentiment will subside, oil prices are expected to fall back to the $60–70 range, and gold prices will likely correct to around $5,200. Currently, the market expectation probability for a ceasefire before April is as high as 64%.

However, vigilance must be maintained for the following three major variables:

  • Effective blockade of the Strait of Hormuz: This strait carries 20%–30% of the world’s seaborne oil. If the conflict spirals out of control resulting in an effective blockade, Brent oil prices are highly likely to violently break through $100–110/barrel in the short term. This is the most urgent tail risk to watch.
  • The double backlash if the US falls into a prolonged war: If the US is forced to deploy ground troops, a deadly chain reaction may occur: a surge in oil prices will force the Fed to sharply raise interest rates, directly threatening Trump’s midterm elections; simultaneously, it could get stuck in a quagmire similar to the Russia-Ukraine conflict, continuously draining national power.
  • Uncertainty of Iran’s internal power vacuum: Whether the interim leadership committee can suppress internal divisions within the Revolutionary Guard will determine if Iran moves toward an extremely militarized “military government” model or collapses amid internal and external crises, directly influencing the probability of escalation.

Risk Warning and DisclaimerThe market carries risks; investment needs caution. This article does not constitute personal investment advice and has not considered an individual user’s special investment goals, financial situation, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article fit their specific circumstances. Any investment decisions based on this content are at your own risk. ```