With oil holding above $115 a barrel and US equities sitting close to correction territory, analysts are increasingly focused on what the next few weeks of the Iran war could mean for markets — and for how far President Trump is willing to push a conflict that he may have set himself an informal deadline to wrap up.
Markets Under Pressure
The S&P 500 has fallen around 9% from its most recent peak, dipping below its 200-day moving average — territory that typically signals broader investor concern. Ed Yardeni of Yardeni Research told clients the selloff reflects the fog of a potential US ground operation in Iran, which he called the “bog of war.” He noted that sentiment has turned sharply bearish, which from a contrarian perspective he views as a potential floor — historically, very bearish sentiment has often preceded recoveries. Asian and European equities followed US markets lower, while bond yields have risen as investors grew nervous about the impact of sustained high energy prices on growth.
Kharg Island and the Ground Operation Question
Thousands of additional US troops are moving into the region, fuelling expectations of a ground operation. What exactly that operation would target remains unclear. Possibilities being discussed include securing the Strait of Hormuz, seizing Iran’s main oil export terminal on Kharg Island, or extracting Iran’s remaining uranium stockpiles. Trump told the Financial Times his preference would be “to take the oil” — an objective that would require control of Kharg Island.
The Washington Post has reported that any ground mission would likely take weeks. Analysts at MarketStack, an investment research publication, say a Kharg operation is widely treated as near-certain among those tracking the conflict closely. But they caution that the hard part comes after initial seizure. “Taking the island is the easy part — holding it, defending it, and preventing Iran from torching it or continuing to harass shipping via asymmetric warfare means is where every plan breaks down,” the publication noted.
The TACO Timetable
Macquarie strategists Thierry Wizman and Gareth Berry have floated what they call the “TACO” scenario — shorthand for “Trump Always Chickens Out.” Their thesis: Trump appears to want the war resolved within roughly six weeks, and with the conflict now one month old, the window is closing. If Tehran doesn’t capitulate as that deadline approaches, they argue Trump may be the one forced to make concessions rather than escalate further. “TACO has not happened yet. TACO may be for when the deadline is reached but is not met,” they told clients.
Iran’s Red Sea Card
Iran still holds significant leverage. With the Strait of Hormuz effectively under its control, Tehran can also activate the Houthis in Yemen to threaten the Bab el-Mandeb strait — the other major exit route for oil exports through the Red Sea. A Houthi missile strike on Israel over the weekend underscored the threat is real and active. Saudi Arabia has reportedly managed to keep some tankers moving through the Red Sea, potentially through informal arrangements with Houthi leadership, but the route remains highly exposed.
Trump has claimed Iran conceded to most of the 15 demands in the US peace proposal. Iranian officials have disputed this characterisation. The war, in any case, continues.