What is the future of the US-Iran conflict? Where is the market headed?

Zhuzi, Golden Finance

According to a report by the U.S. newspaper The New York Times on March 29 local time, two U.S. military officials said that hundreds of U.S. special operations forces personnel have arrived in the Middle East, including Army Rangers and Navy “SEAL Team” members, with the goal of “providing more options” for the United States’ military actions against Iran. The report said these special operations personnel have not yet been assigned specific missions, but as a professional ground combat force, they may take part in operations related to the Strait of Hormuz, Qeshm Island, or Iran’s nuclear facilities.

What will become of Iran’s future situation? How will the market trend going forward?

I. Recent developments in the Middle East conflict

1. “Seizing the island” and troop buildup

On March 29 local time, Trump said he wants to “seize Iran’s oil resources,” and may even take over Qeshm Island, an important export hub.

“Honestly, the thing I like most is taking oil from Iran, but some dumb people in the U.S. say, ‘Why would you do that?’ But they’re dumb people.”

Qeshm Island was not widely known in the first place, but in this war it became famous in one fell swoop because of Trump’s threat.

Qeshm Island has a total area of only 20 square kilometers. It is administered by the neighboring Bushehr Province, and there is a seaport and an airport on the island.

In 2015, the terminal facilities on the island were operated by Iran National Oil Company. On March 13, the United States announced, as part of the 2026 Iran war, that it had bombed the military facilities on Qeshm Island, but it did not attack the island’s oil infrastructure.

The U.S. attack on this small yet important island in the northern Persian Gulf was tantamount to directly striking the carotid artery of Iran’s economy. Ninety percent of Iran’s crude oil is exported through the terminal on this island, and the crude oil is delivered here via pipelines. Ultra-large oil tankers—capable of carrying up to 85 million gallons of crude oil—can load oil directly at the island’s long pier. Because the waters near the island are deep enough and unlike Iran’s domestic coastline, which is relatively shallow, the tankers are able to berth and conduct operations.

As an oil export terminal for Iran, Qeshm Island is one of the important sources of revenue for the Islamic Revolutionary Guard Corps.

In line with the “seizing the island” plan described above, Trump’s moves to increase troops toward Iran also do not rule out the possibility of conducting amphibious landing operations.

Trump has been strengthening the deployment of U.S. forces in the region. The Pentagon has ordered the deployment of 10,000 trained soldiers responsible for seizing and controlling land. About 3,500 soldiers arrived in the region last Friday, including roughly 2,200 Marines. Another 2,200 Marines are also on the way, and thousands of soldiers from the 82nd Airborne Division have also been ordered to head to the region.

Mohammad Bagher Ghalibaf said Iran would “pour firepower” on any U.S. troops attempting to enter Iranian territory. “The enemy is openly sending negotiation signals, but is secretly plotting ground attacks.”

2. “15 ceasefire demands”

The 15-point peace plan proposed by Trump did not publish an official text, but leaked versions show that the document simply compiles all the demands the U.S. and Israel have made of Iran over the years.

The document reads more like surrender terms than a basis for negotiations.

Key points in the document include U.S. demands that Iran commit to never developing nuclear weapons, not carrying out uranium enrichment activities within Iran, giving up support for “proxies,” opening the Strait of Hormuz and ensuring it is a “free sea,” restricting the number and range of ballistic missiles, and so on. In response, the U.S. would lift all sanctions on Iran, help it develop civilian nuclear power projects, and more.

On March 30, Trump told reporters on Air Force One that Iran has “met” most of the “15 ceasefire demands” previously presented to Tehran by the U.S., though it is currently unclear whether the two sides are truly engaging in substantive negotiations. He said: “They’ve met most of our points. Why don’t they do that? We will present a few more other demands.”

On the public front, Iran has clearly rejected a list of 15 ceasefire conditions and instead put forward its own five preconditions in return—one of which includes full control over sovereignty of the Strait of Hormuz.

Over the weekend, officials from Pakistan, Saudi Arabia, and Turkey held meetings in an attempt to find a way out of the conflict, but there is currently no sign that the talks have made substantive progress. The Pakistani foreign minister, after meeting with counterparts, said: “Both Iran and the United States have said they trust Pakistan and are willing to let Pakistan host the follow-up negotiations.” However, both sides have not indicated that they are prepared for direct dialogue.

Iranian Foreign Ministry spokesperson Baghaei said: the proposals delivered to Iran by the U.S. via a mediator are extremely extreme and unreasonable. Baghaei said in an interview with the media that these proposals concern Iran’s fundamental rights and do not reflect goodwill or a serious diplomatic stance. He also said that Iran must rely on its own capabilities to ensure security and will use all means to prevent being attacked again.

3. Passage through the Strait of Hormuz

On the 29th, Trump said Iran allowed 10 oil tankers flying Pakistan’s national flag to pass through the Strait of Hormuz last week, and that number has now increased to 20. He told the UK’s Financial Times, “These tankers have set sail and are heading straight through the middle of the strait.” Iran’s Speaker of the Parliament of Islamic Consultative Assembly, Qalibaf, approved the decision.

When asked about Iran’s plan to charge a toll in the Strait of Hormuz, Trump said: “I have to first confirm whether that’s true, but the U.S. can stop this action very quickly. We can get this done in two minutes. We can do it so quickly that you’ll feel dizzy.”

In reality, Iran has already set up “toll stations” and started charging. Citing shipping-industry data firm Lloyd’s Intelligence, foreign media reported that since the 13th of this month, several global shipping companies have submitted detailed documents to the Islamic Revolutionary Guard Corps of Iran, including records of cargo, ship owners, destinations, and crew lists, and received permission to transit the strait. Lloyd’s Intelligence said that at least two ships have used RMB to pay the toll.

Iran has begun moving to institutionalize the “toll” system. At present, Iran’s parliament is drafting a related bill, which mentions a plan to levy roughly $2 million in tolls per ship. Iranian semi-official Tasnim News Agency reported on the 27th that if the system is implemented, annual toll revenue could exceed $100 billion. In the pre-war period, about 120 ships passed through the strait every day.

II. Will Iran’s situation escalate?

1. Trump wants to seize Iran’s stockpile of enriched uranium

The Wall Street Journal reported that Trump is considering a plan that could involve U.S. forces entering Iran to seize its stockpile of enriched uranium. If the plan is carried out, it would mark a sharp escalation of the situation.

Before the U.S. and Israel launched a series of airstrikes against Iran in June last year, external assessments suggested that Iran possessed more than 400 kilograms of highly enriched uranium at a concentration of 60%, and nearly 200 kilograms of fissile material at a concentration of 20%, which could be quickly enriched to weapons-grade uranium at 90%.

Former U.S. military officers and experts pointed out that if U.S. forces were to seize Iran’s highly enriched uranium by force, it would be an extremely complex and high-risk task, potentially inviting retaliation from Iran.

2. Trump could get stuck in a war of attrition

According to BBC, if the U.S. and Iran fail to reach an agreement, Trump essentially has few options left: Trump can declare victory, claiming that the U.S. has destroyed Iran’s military power and the mission is complete, and that reopening the Strait of Hormuz is not his responsibility. However, that could trigger severe turmoil in global financial markets and shock his European, Asian, and Gulf allies, who are already dissatisfied. A wounded and angry Iranian regime would still have ample room to further pressure the world economy.

In addition, the U.S.’s troop buildup toward Iran implies it is considering initiating amphibious landing operations. This could be exactly what Iran wants, because Iran hopes to drag the U.S. into a longer-lasting war of attrition.

3. Iran’s proxy wars

Since the 1980s, Iranian leaders have sought to build armed partners by cultivating them in Arab countries. Through Lebanese Hezbollah, militia groups in Iraq and Syria, Palestinian armed groups in Gaza, and Yemen’s Houthi forces, Iran has constructed a network that disrupts stability—allowing it to project its influence while avoiding direct armed clashes with Israel and the United States.

1) Lebanese Hezbollah

On March 29, Lebanese Hezbollah forces moved deep into northern Israel and are currently fighting in the Israeli-occupied areas in the Galilee region. Israeli media reported that fierce clashes took place near Kiryat Shmona and Metula, with multiple Israeli Defense Forces outposts being overrun. The headquarters in the rear of the Israeli Defense Forces ordered an immediate large-scale evacuation, causing the southern roads to completely collapse. This was the deepest advance Hezbollah has ever made into Israeli-occupied areas.

It is a hybrid military and political organization led by Lebanese Shiites. It is both a legitimate political party and one of the strongest non-state armed forces in the Middle East. In 1982, Israel invaded southern Lebanon, and with direct support from Iran and Syria, it was formed by integrating Lebanese Shiite militias, and publicly emerged in 1985.

2) Iraqi Shiite militias

On March 29, the armed group “Brigades of the Blood Protectors” of Iraqi Shiite militias launched hundreds of attacks on U.S. targets in Iraq and surrounding areas using drones and rocket artillery.

Iraqi Shiite militias are a semi-militarized alliance dominated by Shiites within Iraq. In 2018, the government absorbed them as part of the security forces, but they kept their factional independence and pro-Iran character. Iraqi Shiite militias have received long-term support from Iran’s Islamic Revolutionary Guard Corps’ “Quds Force,” and they are deployed in Iraq, Syria, and other places.

3. Yemen’s Houthi forces

Yemen’s Houthi spokesperson Yahya Saree said on the evening of the 28th that the group carried out a second round of attacks on important targets in southern Israel using cruise missiles and drones. The Houthis’ military operations “will continue in the coming days,” until the United States and Israel “stop the aggression.”

The Houthis are an armed group that rose during years of civil war in Yemen and became the country’s strongest political force. Because it is located near key shipping routes at the entrance to the Red Sea, it can disrupt international trade. The group has about 20,000 armed personnel and represents the Zaydi branch of Shiite Islam. The Houthis initially gained widespread support among Yemeni Shiite people in the early years of this century. The U.S. accuses Iran of arming, funding, and training the Houthis, but the Houthis deny that they are Iran’s proxy, while saying that there are political commonalities between the two sides.

By building a proxy network covering Lebanon, Iraq, Yemen, and more, Iran has formed a low-cost, deniable, and highly flexible asymmetric warfare system. Not only is this system difficult to destroy using traditional military means, it can also continuously pressure opponents during conflicts and be converted into an important bargaining chip in negotiations. As forces such as the Houthis and Hezbollah gradually intervene in the current conflict, the war is showing a trend of evolving from a “conflict between states” into a “cross-regional proxy war,” and the impact on the global energy and shipping system will be amplified at the same time.

An analysis by The Guardian indicated: the true significance of the Houthis joining Iran’s war depends on whether they plan to launch a few missiles and drones at Israel from afar, or whether they will use their geographic advantage near the narrow Strait of Mandeb to effectively blockade Red Sea shipping—just like Iran has effectively blockaded the Strait of Hormuz. If both corridors are affected at the same time, it would “seriously impact global trade and oil supplies.”

4. How long will the war take to end?

Trump emphasized that progress in indirect talks between the U.S. and Iran via Pakistan’s “envoy” has gone smoothly. Trump has set April 6 as the final deadline for Iran to accept a deal to end the war; otherwise the U.S. will strike its energy sector.

According to a report by U.S. broadcaster CBS, the White House has privately told allies that it takes time for the U.S. and Iran to reach a diplomatic agreement. The U.S. estimates that the intense military actions of the war itself will continue for another two to four weeks.

Iran is also skeptical about the “shared timeline” between the U.S. and Israel regarding ending the fighting. The Israel Defense Forces had previously said it expects the fighting to last until after Passover (i.e., the first week in early April).

III. Follow-up market outlook

1. Expectations of rate hikes

“Describing the recent change in the market’s expectations for the central bank’s monetary policy as a ‘180-degree pivot’ seems like it doesn’t quite capture it.” A few weeks ago, the market was still expecting the Federal Reserve to cut rates multiple times in 2026, but it has now clearly begun pricing in the possibility of rate hikes this year.

The latest data from the CME FedWatch Tool shows that by the end of this year, the probability that the federal funds rate will be above the current 3.50%-3.75% range is close to 30%, while the probability of rate cuts has fallen to 2.9%.

This shift in expectations is mainly driven by inflation concerns triggered by the energy market. Since late February when the situation in the Middle East escalated, the price of Brent crude oil has risen from around $70 per barrel to roughly $111 currently. At the same time, U.S. long-term Treasury yields have also climbed sharply; the yield on the 10-year Treasury has risen from below 4% a few weeks ago to around 4.40%.

A newsletter from “Crypto is Macro Now” noted: “Food and energy prices unfortunately will keep rising and remain elevated for some time—at least until the problems of Middle East shipping chaos are resolved. Even if a peace agreement is reached tomorrow (unlikely), it would still take at least a few months to ease things.”

2. “The fourth oil crisis”

On March 30, Zhang Chi, chief strategist at Yuan Guojin Strategy, wrote: Many investors always feel that this “U.S.-Iran war” is similar to the “Russia-Ukraine war,” but in fact comparability is low, especially given major differences in the global energy structure and economic impacts. The “Russia-Ukraine war” can at most be considered energy and geography, corresponding to a localized reduction in supply; and since Russia exited the U.S. swift system, it still sells oil, so the impact is localized and short-lived. But the core of the “U.S.-Iran war” is the Strait of Hormuz. The supply shock in energy is not only limited to Iran—it extends to the entire Gulf states, which account for nearly 50% of energy reserves and more than one-third of energy output. I reiterate one point: the logic of how the “U.S.-Iran war” evolves is not just “an exchange of interests between countries,” but also a “struggle between religions,” so there are risks of a war of endurance, a war of delay, and a war of escalation. And the “Strait of Hormuz” is the “ace” held by Iran and it will absolutely not easily hand over control—understand it this way: if Iran loses control of the “Strait of Hormuz,” it is effectively losing this war! This is the “fourth oil crisis” that I propose will gradually emerge under a “war of endurance” scenario.

Zhang Chi said: the definition of the fourth oil crisis above is “a long war between the U.S. and Iran” and “a long-term blockade of the Strait of Hormuz,” which keeps oil prices high for a long time—this assumption is crucial, and will directly determine the magnitude of future impacts on global inflation, economic activity, and asset prices. We compared the two “oil crises” of 1973 and 1978: changes in the energy supply structure led to a longer persistent cycle of high oil prices, even as long as 2 to 3 years. Meanwhile, the energy price increase cycles in the “1990 Gulf War” and the “2003 Iraq War” did not exceed 6 months—obviously, whether this “U.S.-Iran war” can bring about a “qualitative change” impact on global inflation, economic activity, and asset prices will depend on whether the cycle that keeps oil prices elevated is long enough. My judgment is that such a risk exists.

3. A plunge in financial markets

On March 30, a market selloff triggered by the Iran war is evolving into a full-blown collapse-style selloff on Wall Street. Efforts by all parties to broker a ceasefire and restore Middle East oil supplies ultimately only brought further escalation of the situation, which in turn intensified market panic. The Nasdaq 100 index fell by 1.9% on Friday alone and entered a pullback range; the S&P 500 index fell for a fifth straight week, setting the longest losing streak since 2022; bond prices declined, pushing the 30-year U.S. Treasury benchmark yield close to 5%.

BTC recorded a recent low of $65,600 on March 28, and as of press time it had risen somewhat to $67,574.38, down 1.4% over 7 days.

On March 30, Robert Kiyosaki, author of Rich Dad Poor Dad, posted on a social platform stating that ongoing expansion of national debt and increased money issuance will push inflation upward, and that people’s savings in dollars face continuous depreciation pressure. At the same time, he believes geopolitical conflicts may last for a long time and could provide upside support for oil prices, further worsening the inflation environment. In the current backdrop of global debt, money, and inflation, personal financial cognition and asset allocation are especially crucial. He also maintains a relatively bullish attitude toward assets such as gold, silver, oil, food, and Bitcoin and Ethereum.