The likelihood of the conflict between the United States and Iran concluding within the next 12 months is seen as less than 50% by Barclays. The bank’s latest report outlines a protracted stalemate as the most probable scenario, with sporadic hostilities continuing and nuclear negotiations making little headway.
Strategic Calculations from Washington
Barclays analyst Michael McLean pointed out that both parties believe time is on their side, reducing the chances of a concrete agreement in the near term. The report anticipates that Washington might prepare for this status quo to persist until the end of President Donald Trump’s term.
Barclays evaluated three potential routes for the U.S.: expanding military operations, maintaining the current status, or opting for a unilateral withdrawal. The bank deems the most likely scenario to be Washington retaining control over the Strait of Hormuz amid continuing engagements.
“Expanding military operations carries the risk of Iranian retaliation and opposition from Gulf states. A unilateral withdrawal could result in the loss of U.S. control over Hormuz, diminishing regional influence and international standing.”
Historical Patterns in Conflict Duration
Data from Barclays encompassing 95 interstate conflicts between 1823 and 2003 reveals that wars lasting 6-12 months had an approximately 57% chance of ending in the following year. Conflicts entering their eighth month typically persisted for an average of 1.8 more years.
Oil Exports Near Pre-Conflict Levels
According to the report, the Middle East’s oil exports have reached about 85% of pre-conflict levels. Barclays noted that the global economy has become more resilient to sudden spikes in oil prices.
The recovery in oil flow alleviates the economic pressure on parties to reach a swift agreement. However, for Washington, the risk of losing control over Hormuz makes withdrawal challenging, even if the conflict drags on.
If the prolonged stalemate predicted by Barclays coincides with a steady recovery in Middle East oil exports, the impact on Bitcoin and other cryptocurrencies might remain limited. Yet, any new disruptions in Hormuz that significantly elevate oil prices could heighten inflation concerns in the U.S. and bolster expectations for Federal Reserve rate hikes, potentially decreasing risk appetite and increasing selling pressure on Bitcoin and altcoins.
