The US is about to enter the war

Indicators of US entry to the war are accumulating, raising risks to shipping, aviation and energy, and to US companies.

Commercial Summary: The US is about to enter the war, making this conflict existential for Iran and pushing it into far more extreme escalation, affecting shipping, energy, and aviation. We address the impact on assets in Israel and the GCC, hydrocarbon exports, and the potential end game of this conflict. A full American-Israeli success creates its own set of risks, in that Israel will then try to compel Egypt and Jordan to accept the expulsion of the Palestinians in Gaza and the West Bank, respectively. We also cover some second-order effects in Europe, the Middle East, Turkey, and other regions. We close by covering the absence of a clear end game for this war.

Unless there is a last minute surprise negotiated settlement, or Trump somehow backs down, the USA is about to join Israel’s war against Iran. We list the relevant military indicators leading to this conclusion at the end of this piece.

These indicators suggest that the Americans are close to following Israel into a war with Iran.

The primary objective for the USA will be to weaken Iranian ballistic missile capability as well as destroy the Fordow nuclear facility, and other Iranian nuclear-related assets. The worst case scenario is that the effort to end missile strikes fails, as did the effort to eliminate Houthi missile fire, and the nuclear programme survives, relying on Russian and Chinese aid.

Iran’s reaction

• With the regime facing existential threat, it has nothing to lose from attempting a blockade on Hormuz. We therefore expect risks to shipping to increase dramatically.

• Similarly, Iran will want to build a nuclear weapon sooner rather than later, if the regime survives.