Iran Conflict: How Long, and How Bad?
By Goldman Sachs
The unprecedented US and Israeli coordinated attack on Iran has resulted in the largest energy supply disruption in history. With seemingly no end to the conflict in sight, its potential duration, impact on global energy supplies, and economic and market implications are Top of Mind. Chatham House’s Sanam Vakil and longtime US Middle East advisor Dennis Ross agree that an end to the conflict doesn’t look imminent owing to (the lack of) incentives on Iran’s side and its chokehold on the Strait of Hormuz, which stands in the way of the US declaring victory. To that end, Vice Admiral Kevin Donegan, USN (ret) explains that military convoys would be capable of ensuring safe transit through the Strait, but not of restoring oil flows to anywhere near normal levels. So, we explore the growing implications of these disruptions for energy prices, the global economy, and markets, finding that assets are pricing an inflationary shock, but not a growth shock, which could be the next shoe to drop
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