Iran and the Stock Market: 3 Likely Scenarios and 1 Unlikely Scenario

From a stock and markets perspective, here are 3 of the most likely scenarios (and 1 very unlikely scenario)

**1) Iran Waves the White Flag (20% probability)**

With Khomeini gone Iran's new leadership (hopefully friendly) sues for peace. Conflict is done in 3-7 business days. Markets and oil return to business as usual.

**2) Conflict Drags on For Months, Major infrastructure Damage (50%** **probability)**

Iran's military has sworn to fight to the end. Given their extensive armaments and the possibility of clandestine support from Russia and China, the missiles could fly for 2-16 weeks.

Straits of Hormuz will remain closed. Dubai and Qatar oil refineries could be damaged. Oil to $100+ a barrel. Higher energy prices kick off worldwide inflation. Central banks raise or hold rates. High PE and over-leveraged companies take a major kick in the teeth. Defense and energy sectors print money.

War ends when Iran has shot everything they have and sue for peace.

**3) Years of instability and civil wars (29% probability)**

After the US has withdrawn Iran becomes the next Syria. Islamic, totalitarian, and rebel forces clash for years or decades. Market disruptions continue on and off as some very well armed extremists face off in a critically important energy producing region.

**4) WW III (\~1% probability)**

Russian and/or Chinese involvement and support for Iran becomes a sticking point. US pronounces increased support for Taiwan and/or Ukraine. Additional ships and troops at the borders. Some hot shot pulls the trigger. Shooting war ensues. Let's hope not.

**Position Disclosure: I am long almost every stock in America except Carvana. Read some of my other posts to see my vendetta against them.**