Although President Trump’s statements suggest that negotiations between the United States and Iran are making progress, and U.S. airstrikes on military targets have been suspended for five days, the war in the Middle East continues and the Strait of Hormuz remains closed. Investors must be prepared for all possible scenarios, including those involving fighting that lasts for many months.
The rhetoric of U.S. President Donald Trump once again signals optimism about a swift agreement. Investors, however, have already been misled by similar announcements in the past and have learned not to react too strongly to his often less-than-sincere attempts to verbally influence markets.
As we have emphasized since the beginning of the war, its most important aspect is the effective closure of the Strait of Hormuz. Disruptions to energy commodity supplies, which account for 80–95% of traffic through the strait, are causing enormous volatility in commodity markets. Brent crude futures have risen above USD 110 per barrel, while European natural gas prices are now twice as high as they were before the war.
Significant uncertainty and market volatility are making it increasingly difficult for both investors and international companies to plan ahead. In response to these challenges, below we outline four main scenarios for the course of the war in Iran (from the optimistic case to the worst possible one) and their implications for markets, the global economy, trade, and individual sectors.
Scenario 1: Immediate ceasefire and reopening of the Strait of Hormuz
Main assumptions: ceasefire before the end of March, restoration of traffic through the Strait of Hormuz within the following two weeks
Probability: low (25%)
Rationale: Trump may pre-emptively declare victory and limit the damage. The U.S. administration appears to assign a low probability to regime change or a softening of Iran’s uncompromising stance, which could encourage Trump to opt for rapid de-escalation before the consequences of the conflict become even more severe.
| Foreign exchange market | Given that markets are pricing in a much longer conflict, its end would likely lead to a significant improvement in risk sentiment. We would expect an immediate weakening of the U.S. dollar and a return of the EUR/USD exchange rate to levels seen before the war (1.18) or slightly below. The euro’s gains could be even stronger if markets continue to price in ECB rate hikes and Fed cuts in 2026. We would also expect investors to assign a “Trump risk premium” to the U.S. dollar due to the unpredictability of his decisions, such as attacking Iran without a clear exit strategy, which could deepen the sell-off in the currency.
Emerging market currencies should rally sharply in this scenario, while commodity-linked currencies (CAD and NOK) would lose ground on falling oil prices. EUR/USD: 1.18 EUR/CHF: 0.90 USD/CAD: 1.36 EUR/PLN: 4.25 USD/BRL: 5.10 GBP/USD: 1.36 AUD/USD: 0.71 USD/CNY: 6.85 EUR/RON: 5.10 USD/CLP: 860 |
| Commodities | Oil prices could fall by 30% or more within a few days, as has happened before in history. The scale of the move would depend on whether the Strait of Hormuz is reopened partially or fully. |
| Macroeconomy | Very limited inflationary implications. No risk to global growth and no increase in recession risk. |
| Trade flows | Minimal disruption. Flows from the Middle East to Asia and Europe would be quickly restored and return to normal in a short period of time. |
| Sectors | Energy and defense would record at most moderate gains. Tourism and transport (airlines, automotive, etc.) would suffer only marginal declines and quickly recover their losses. |
Scenario 2: A short conflict and quick reopening of the Strait of Hormuz
Main assumptions: de-escalation begins before the end of March, the war ends within the following 4–5 weeks (that is, before the end of April); oil transport through the Strait of Hormuz resumes within the next month
Probability: medium (50%) – including a 25% chance of Scenario 1
Rationale: a) the United States declares that it has achieved its objectives (significant weakening of Iran’s air force, the loss of more than 20 vessels, destruction of key military targets, and an 85–90% drop in the intensity of Iranian missile attacks), b) Trump is under pressure to end the war both from markets (rising oil prices and a sell-off in the U.S. stock market) and from voters (higher oil prices would be inflationary and could hurt Republicans in the 2026 midterm elections, especially if more American soldiers are killed)
| Foreign exchange market | Moderate volatility in the foreign exchange market. Risk aversion would remain elevated during the conflict (the U.S. dollar would stay strong), while European currencies (EUR, CEE) would be under pressure due to their high dependence on oil imports. Commodity currencies (CAD, NOK) would gain, while high-beta emerging market currencies (ZAR, MXN, HUF) would lose ground.
We would expect most – if not all – of these moves to reverse once the war ends: a strong rise in EUR/USD, broad-based depreciation of the U.S. dollar, and gains in emerging market currencies, especially those of oil importers (that is, Asian and CEE currencies). The strength of the rebound would depend on the scale of the increase in oil supply. EUR/USD: 1.13 (before the rebound) EUR/CHF: 0.92 USD/CAD: 1.38 EUR/PLN: 4.30 USD/BRL: 5.50 GBP/USD: 1.33 AUD/USD: 0.69 USD/CNY: 6.90 EUR/RON: 5.10 USD/CLP: 980 |
| Commodities | Oil prices would peak around recent highs and then fall sharply once the war ends. Unlike the Russia–Ukraine conflict, the supply shock would be temporary, provided the Strait of Hormuz is fully or almost fully reopened. Brent crude could stabilize at USD 80–90. International Energy Agency (IEA) oil reserves would be used to cushion the supply shock in the short term (3–4 weeks).
Historical precedent suggests a rapid reversal: The First Gulf War (1990–1991): oil prices doubled from July 1990 to the end of that year; once the conflict ended, they fell by 33% in a single day and had returned to pre-invasion levels by mid-1991. |
| Macroeconomy | A moderate rise in inflation (+0.1–0.2%). Limited impact on global economic growth. No increase in recession risk. No strong reaction from central banks (the ECB and BoE should keep interest rates unchanged, while the Fed may cut them in the second half of the year). |
| Trade flows | Temporary disruption in the Strait of Hormuz. Tanker traffic resumes shortly after mines are cleared. Supplies from the Middle East to Asia (China, India, Japan, and South Korea) initially fall sharply, then return to normal. Trade routes are adjusted only slightly to fill the supply gap. |
| Sectors | Energy and defense gain moderately and temporarily. The tourism industry suffers slight losses. |
Scenario 3: A medium-term war and a closed Strait of Hormuz
Main assumptions: no quick resolution or signs of de-escalation within a few weeks. The war continues for another 2–6 months. The Strait of Hormuz remains closed (or largely unnavigable) for 1–3 months, rather than just a few weeks
Probability: medium (30%)
Rationale: a) no regime change in Iran: the supreme leader is replaced by his son, who does not want to reopen the strait, b) depriving Iran of its missile and nuclear arsenal requires a long-term strategy, not just a few days of bombing
| Foreign exchange market | We expect high volatility and more pronounced risk-off trading. The U.S. dollar would strengthen sharply thanks to its safe-haven status and the fact that the United States is a net oil exporter. The EUR/USD pair could move closer to 1.10. Sterling would lose less due to the United Kingdom’s somewhat lower dependence on oil imports than the EU.
CAD and NOK would strengthen significantly against other G10 currencies. The sell-off in emerging market currencies would intensify as carry trade positions are unwound. Asian currencies would come under pressure (80% of shipments passing through the Strait of Hormuz are destined for Asia). EUR/USD: 1.10 EUR/CHF: 0.92 USD/CAD: 1.39 EUR/PLN: 4.35 USD/BRL: 5.10 GBP/USD: 1.31 AUD/USD: 0.68 USD/CNY: 6.95 EUR/RON: 5.10 USD/CLP: 1080 |
| Commodities | Oil prices would likely exceed recent highs (USD 118) and could remain around USD 120–150 per barrel. The release of IEA reserves would be sufficient for only 3–4 weeks of Strait of Hormuz closure. |
| Macroeconomy | As a direct result of higher energy and transport costs, global inflation would rise by 0.5–1.0 percentage points. Second-round inflation effects (wage-price pressure) would intensify over time, potentially leading to unanchored inflation expectations.
Closing the Strait of Hormuz could reduce global GDP growth by 0.2–0.5 percentage points (mainly through higher prices, with supply chain disruptions and uncertainty amplifying the effect). Europe and Asia appear to be the most exposed to a slowdown. Central banks (including the ECB and BoE) would raise interest rates, while the Fed would keep them unchanged, increasing the risk to global growth. |
| Trade flows | Supplies from the Middle East – especially oil and LNG – to Asia and Europe would fall sharply (by 60–75% by sea).
Energy importers would begin shifting to alternative sources of supply: ➢ oil and LNG exports from the United States to Asia (+30–50%), ➢ oil exports from Brazil to China, India, and Europe (+25–50%). Non-energy trade routes would not be significantly altered. Rerouting shipments via the Cape of Good Hope could cause delays in trade flows, and the disruptions would add to rising prices. |
| Sectors | Winners: energy, defense, maritime freight
Losers: agriculture and food production (Iran and nearby countries are major exporters of ammonia-based fertilizers), tourism (especially aviation) |
Scenario 4: A prolonged war and a longer closure of the Strait of Hormuz
Main assumptions: the war lasts at least 6 months. The Strait of Hormuz remains closed (or only partially open) for months. Escalation and spillover across the entire region remain possible.
Probability: low (20%)
Rationale: the Iranian regime remains uncompromising. Ammunition shortages and limited naval capacity may make the closure of the Strait of Hormuz its main strategic survival mechanism. Iran cannot win in a direct confrontation, so it relies on endurance and a war of attrition.
| FX market | We would expect enormous volatility and a prolonged period of risk aversion. The U.S. dollar would retain its leading position, while EUR/USD would test the lows seen in 2025 (around 1.05 or lower). GBP/EUR could move toward 1.20.
Commodity currencies would initially gain, then likely surrender part of those gains due to expectations of slower global growth. Emerging market currencies (especially Asian oil importers) would experience a strong sell-off. EUR/USD: 1.05 EUR/CHF: 0.93 USD/CAD: 1.41 EUR/PLN: 4.40 USD/BRL: 6.20 GBP/USD: 1.28 AUD/USD: 0.66 USD/CNY: 7.00 EUR/RON: 5.20 USD/CLP: 1215 |
| Commodities | In the worst-case scenario, Brent crude futures could rise to USD 150 per barrel or higher. |
| Macroeconomy | Prolonged stagflation in major economies. Global inflation could rise by 1.0–1.5 percentage points, leading to entrenched second-round effects (a wage-price spiral, higher food prices, and unanchored inflation expectations).
Economic growth would suffer more severely (potentially by 1–2 percentage points, depending on when the Strait of Hormuz reopens). Net oil importers (the euro area, the United Kingdom, and Asia) would be hit hardest. The euro area could slip into recession. Central banks would find themselves trapped between rising inflation and the risk of slowdown and recession. The likelihood of aggressive interest rate hikes would increase, as policymakers would treat inflation control as the priority. |
| Trade flows | Energy commodity flows from the Middle East to Asia and Europe would be severely disrupted (down 70–95% or collapsing completely). Exports of non-energy goods would also decline, including:
➢ fertilizers to Asia, ➢ fertilizers to Brazil and Africa, ➢ petrochemicals, plastics, polymers, and rubber worldwide (creating risks for the automotive, aviation, and construction sectors), ➢ aluminium and unprocessed metals to Asia and Europe, ➢ electronics, batteries, and pharmaceuticals to Asia, ➢ helium from Qatar to the global market (creating risks for the AI sector). Alternative transport corridors for energy commodities would likely be developed: ➢ oil and LNG from the United States to Asia and Europe, ➢ oil from Brazil to China, India, and Europe, ➢ oil and gas from Norway to the rest of Europe, ➢ LNG from Canada and Australia to Asia. Alternative non-energy trade flows could also perform relatively well, but their volumes would not be significant: ➢ fertilizers from the United States and Canada to Asia and Europe, ➢ helium from the United States to Asia and Europe, ➢ petrochemicals, plastics, polymers, and rubber from the United States to China, India, and Europe, ➢ petrochemicals, plastics, polymers, and rubber from China to the rest of Asia, ➢ aluminium from Canada to Asia and Europe. |
| Sectors | Winners: energy (outside the Persian Gulf), defense, renewable energy, maritime freight (outside the Strait of Hormuz)
Losers: sectors sensitive to energy price changes (aviation, automotive, services); industrial and petrochemical sectors in Asia; logistics, tourism, and luxury goods; semiconductors and AI hardware (Qatar accounts for one-third of global helium supplies, which is crucial for cooling semiconductor systems) |
Source: https://managerplus.pl/wojna-w-iranie-analiza-scenariuszy-81648
