As President Trump’s latest ultimatum to surrender expired, as was to be expected given the numerous precedents, the predictable about-face occurred, in the form of an urgent announcement of the US withdrawal from the war effort.
Indeed, the US government found itself in a dead end from which it was difficult to escape, except by unilaterally ceasing hostilities, attributing to itself a vaunted but untrue victory, or it would have risked permanently jeopardizing its chances of maintaining its legislative majority in the midterm elections scheduled for November. On the other hand, the patchwork Iranian government has nothing left to lose, with the country half destroyed and the previous leadership decapitated, a grave strategic error committed by the US-Israeli coalition, which has equated Persia with Venezuela. But as has often happened during this US presidency, things are never as they seem, and Mr. Trump’s seemingly wavering decision-making appears to conceal a precise strategy with objectives far different from those initially proclaimed and shared by the majority of observers.
It should be remembered that the presidential team is composed of authoritative and competent figures, characterized by having been lent to politics by industry and finance, carefully selected by the President who therefore, to a certain extent, appears willing to follow their advice. In short, it is perhaps reasonable to think that this third Gulf War, like the two that preceded it in 1990 and 2003, can be traced back to the same common denominator: the price of a barrel of oil. Indeed, it should be remembered that 2025 was a disappointing year for the energy sector, with a barrel of oil consolidating around $60 for WTI and that at the beginning of the year the Venezuelan government fell, effectively under US administration. Therefore, given the availability of not only domestic oil resources but also the world’s most important oil fields, those in Venezuela, it’s clear that a 50% increase in the price of a barrel would result in a significant profit for the US government budget. Further supporting this thesis is the issue of the blockade of the Strait of Hormuz, which anyone would have considered Iran’s first response to a military attack. The fact that the coalition conspicuously failed to take, and therefore even contemplate, any countermeasures would demonstrate that the blockade was tolerated, both because it significantly contributed to the price hike and because it harmed China, which imports 90% of Iranian crude oil, obtaining a significant discount compared to market value. Conspiracy narratives such as the cover-up of domestic scandals rather than subservience to Israel’s bellicose will would thus be eliminated. The hostilities ended when President Trump decided it was no longer possible to push the issue further, risking an irreparable loss of electoral support, despite having achieved much of what he had actually set out to achieve with the military operation in the Gulf.
The recent performance of the major stock indices seems to perfectly support this theory, with them returning to pre-Middle Eastconflict levels in just a few trading sessions. International investors not only believe the conflict is resolved, but also downplay its medium-term macroeconomic consequences, believing the economic scenario envisaged at the beginning of the year remains valid. For yet another consecutive year, the authoritative institutions that predicted a recession of sorts in the second half of 2026 will have to reconsider. The global economy appears likely to return to average GDP growth of 3.5%, as evidenced by the positive performance of cyclical and financial sectors, which are not at all concerned about a possible deterioration in credit, not to mention the small-cap stocks, which have surprisingly held up thanks to the lack of real fundamental concerns. The dynamics of the S&P 500 index during these approximately six weeks of the Gulf crisis deserves a little more in-depth analysis, in the sense that it is surprising that the maximum loss was limited to approximately 7%, with a textbook recovery starting from the technical support of 6,350. Some more astute market insiders hypothesize that the strong hands of the market, the Fed and investment banks, compressed the prices of the magnificent 7 in January and February, in order to use this small number of stocks, which nevertheless account for 40% of the index, through targeted purchases during the crisis to control the market decline. Looking at the billion-dollar profits recorded by US banks in the first quarter, this working hypothesis doesn’t seem so far-fetched. Therefore, the goal of this massive military operation would be to stabilize the price of a barrel of oil in the supply chain at around $85, its current value, with an increase of approximately 50% compared to 2025; to control the global oil market jointly with Saudi Arabia, with all due respect to OPEC, which has relegated to a secondary role; to provide a temporary and not insignificant favor to Russia, which has capitalized on the recent surge, also opening a glimmer of hope for the embargo on its gas; and, last but not least, to send a clear message to China in anticipation of the possible upcoming meeting between the two leaders, which could establish a new balance of power in global spheres of influence.
Returning to future stock market dynamics, to borrow the famous maxim from Tomasi di Lampedusa’s The Leopard, “If you want everything to stay the same, everything must change,” it seems that the predictions made in January can be upheld. Global GDP is growing substantially, central banks’ backed liquidity is contracting, the yield curve is positively sloped, although the decline in US interest rates will be somewhat delayed, the euro-dollar parity is confined within the broad 1.15-1.20 range at least until mid-year, the underlying trend of the indices remains positive, making it suitable for short-term gains. Sectors to focus on, broadly – cyclical sectors which include technology, AI programming, infrastructure, including energy, major construction, basic chemicals, raw materials, consumer durables, and even the energy sector, which has seen a significant increase but still has significant untapped potential in US oil, nuclear, clean energy, and even coal. Geographical allocation, as already indicated in January and especially after the March gains, favor all Asian markets.
Nicola Bravetti Data source: Bloomberg
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