From here, the possible military and geopolitical scenarios could fill a book and also seem to change by the day. For financial markets, the branching point is simpler and more brutal: does this end in days, or does it become a forever war that involves an entire region?
Scenario 1: Four to seven days, then internal Iranian uncertainty
US and Israeli strikes exhaust fixed military targets quickly, operational tempo drops, and a de-facto ceasefire emerges within the week. Iranian retaliation stays bound, damaging enough to be politically useful domestically, but not enough to draw a decisive US counter-escalation. The Strait of Hormuz sees harassment but no serious disruption, partly because Tehran’s own oil exports to China depend on it. The regime either survives in weakened form or fractures into a messy internal transition.
For markets, this is the June 2025 playbook: an initial oil spike, which fades as Hormuz disruption fears ease. A temporary war premium, with no lasting macro implications.
Scenario 2: Iranian retaliation forces Trump’s hand – the forever war
President Trump already said on Sunday evening that the war could last up to four or five weeks. Iranian retaliation, which has hit 10 countries so far, does not point to any imminent de-escalation. In this more severe scenario, strikes continue past fixed military targets into infrastructure and mobile assets, lowering operational tempo but extending the timeline indefinitely. Iran, backed into a corner with regime survival in question, escalates asymmetric economic warfare with sustained harassment of tanker traffic, activation of Houthi attacks on Red Sea shipping, and attempts to disrupt the Strait of Hormuz.
Even partial disruption to a chokepoint handling 20 million barrels per day of oil and over 100 bcm of LNG annually produces a supply shock of historic proportions. The whole region becomes unstable. The market implications are materially different: oil moving toward $100 and beyond, a genuine equity market correction, a flight to bonds that holds rather than reverses, prolonged supply chain disruption for both China and Europe, and a central bank dilemma that has no clear answer.