On February 28th, a joint US-Israel military strike against Iran ignited the geopolitical powder keg in the Middle East. Following the confirmation on March 1st of the death of Iran's Supreme Leader Khamenei, gold and crude oil prices displayed a classic pattern of surging and then retreating, indicating a relatively measured market response.
In a recent research report dated March 2nd, Soochow Securities stated that the current macroeconomic theme is clear: in the short term, markets will follow a trading logic of "risk-off first, easing second." However, the shipping status of the Strait of Hormuz, whether the US becomes involved in ground warfare, and Iran's internal power transition remain three significant tail risks looming over the market.
Specifically, a substantial blockade of the Strait of Hormuz could cause global crude oil prices to surge past $100 per barrel in the short term. If the US is forced into a protracted ground war, it would face repercussions including soaring oil prices, potential aggressive interest rate hikes by the Federal Reserve, and a drain on national strength. The direction of Iran's internal power vacuum and succession will directly influence the probability of further conflict escalation.
Soochow Securities believes that, in the long term, the frequency and intensity of global geopolitical conflicts are increasing, enhancing the strategic value of holding gold and crude oil as core hedging assets in a portfolio.
The report points out that while initial results have been seen from Trump's strategy of "using force to promote talks," the risks associated with the Strait of Hormuz and a prolonged war remain a sword of Damocles for the market. During the February 28th military action, Trump announced the initiation of "Operation Epic Fury," aimed at destroying Iran's missile industry, controlling the Strait of Hormuz, and maintaining a "zero tolerance" policy towards nuclear facilities. Iran responded with a measured counterattack, "True Promise-4," involving hundreds of missiles and drones.
Soochow Securities indicates that the current market probability for a ceasefire before April is as high as 64%. In a baseline scenario, Trump, having successfully carried out the targeted strike, holds the initiative. Both sides are likely to replicate the pattern of the 12-day Iran-Israel war of June 2025, using limited aerial strikes to declare victory and placate domestic politics.
The report forecasts that, under the baseline scenario, the US-Iran conflict is expected to be contained within limited aerial strikes, with the situation likely cooling down within 2-3 weeks. At that point, as risk-off sentiment subsides, oil prices are expected to fall back to the $60-70 range, while gold prices are projected to retreat to around $5200 per ounce.
However, vigilance is required regarding the following three key variables:
1. **Substantial Blockade of the Strait of Hormuz:** This Strait carries 20-30% of the world's seaborne crude oil. If the conflict spirals out of control and leads to a substantial blockade, Brent crude prices could violently break through $100-110 per barrel in the short term. This represents the most critical tail risk at present. 2. **The Dual Repercussions of the US Sinking into a Protracted War:** If the US is compelled to deploy ground forces, it would face a fatal chain reaction: surging oil prices forcing the Federal Reserve to hike rates aggressively, directly threatening Trump's mid-term election prospects; simultaneously, becoming mired in a quagmire similar to the Russia-Ukraine conflict, continuously depleting national strength. 3. **Uncertainty from Iran's Internal Power Vacuum:** Whether the interim leadership council can suppress divisions within the Revolutionary Guards will determine if Iran moves towards an extremely militarized "military government" model or collapses under internal and external pressure. This will directly influence the likelihood of conflict escalation.