will the us strike iran?

A bloody start to the year
The beginning of the year saw pro-regime change protestors being brutally and lethally crushed.  Trump threatened Iran with intervention if the crackdown didn’t stop leading to an uneasy truce.

Send in the Navy

Following a massive build-up of US forces in the Gulf, now consisting of two carrier strike groups that can project massive firepower, Trump has this week given Iran a 15 day ultimatum to come to the negotiating table to discuss its nuclear programme - or else.

Not just for show

Following the assertive Venezuala intervention at the start of this year, the US build up is not merely a show of force or posturing: it is providing Trump with military options. And regional actors now know there is a willingness and ability to act if necessary.

Negotiations over what?

In reality, discussions around the nuclear programme are an off-ramp, in our view – it was largely put beyond use following US intense bombing last year.  Talks are really about muting Iran’s nuclear intentions: and efforts by US (and Israel) to contain Iran, and open a pathway to an alternative, less bloody, regime.
The embattled regime has little leverage.  Less popular at home, with an economy that has all but collapsed following systematic targeting of capital flows by US sanctions.  Iran has also seen its regional proxies weakened following systematic targeting by their adversaries.  Iran’s remaining cards are to launch rocket attacks at Israel, disrupt shipping in the Strait of Hormuz (which is also its own economic lifeline for oil sales to China),   It would more likely do this in RESPONSE to an attack, rather than to provoke one.

Why the Strait of Hormuz is so important

About 20 million barrels per day – some 25% of global production – passes through the Strait each day.  A shutdown owing to military action and a risk to shipping, or an Iranian blockade would be similar to the 1973 oil blockade in terms of impact.  Back then, a severe oil spike exacerbated inflation, and even pushed some economies into recession.  A closure of the Strait is a materially negative scenario for global growth.

What it means for markets

Near-term: With the oil price spiking to just shy of $72/bbl (from $60.85 at the end of 2025), direct Energy exposure as part of a diversified assets mix has helped act as a form of portfolio insurance, particularly now that Gold so volatile it is behaving more a risk asset than a protection assets at the moment.

Medium-term: Should conflict arise, the risk to the strait increases and – depending on the duration of any disruption – this could require a reassessment of assumption on global growth.
The US-Iran proxy war has been fought for years.  If it turned “hot,” it would force a reappraisal of energy shock risk and related inflation assumptions.

In the meantime, we hope that negotiations prevail.