volatility in the S&P 500.
The immediate consequence of a military operation against Iran would probably be a rise in oil prices. Despite US sanctions, Iran has remained OPEC's third largest oil producer, behind Saudi Arabia and Iraq, surpassing the United Arab Emirates. How is this possible? Like Russia, Iran employs the “shadow fleet” strategy and various commercial methods to circumvent sanctions.
The real game-changer would be if Iran attempted to disrupt shipping through the Strait of Hormuz and succeeded. That would make the risk of another inflationary surge very real, forcing central banks to respond — the same story as always. For now, though, investors aren’t pricing in that scenario.
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