#IsraelIranConflict The war between Israel and Iran is very likely to escalate into a prolonged conflict. On one side are the Jews, obsessed with the fear of ethnic annihilation, with significant potential supported by the U.S. On the other side are the Islamic warriors who have always sworn to never coexist with the Jews. Iran is currently facing an economic crisis; however, with a vast country, many people, and abundant resources, it can still fight for the long term. If Iran does not negotiate and is determined to fight to the end, it will create extremely large economic risks.
Firstly, oil prices have skyrocketed since Israel began bombing Iran. I believe this is an opportunity for oil-exporting countries to make more money, so they will not increase production soon. High oil prices for a long time will lead to inflation. #TrumpTariffEffect Coupled with Trump's tariffs, it will certainly create an economic recession as inflation will erode the profits of all businesses, and the high borrowing costs mean the FED will not dare to cut interest rates. The U.S. government is also heavily in debt, so it cannot afford to launch a large economic stimulus package.
Secondly, Iran holds a strategic card: the Strait of Hormuz—the gateway for Middle Eastern oil. If Iran blockades this strait, oil prices will soar. Of course, this is the worst-case scenario if Iran is pushed to the edge. If China supports Iran by buying all of Iran's oil (as it did with Russia), then this becomes even more plausible. A crisis is certain to occur when the world splits into two separate economic factions: Russia-China-Africa-Latin America vs. the U.S.-Europe-East Asia.
Let me reiterate that this is a very bad scenario that the U.S. is eager to avoid: Donald Trump has repeatedly stated that the U.S. is not involved in Israel's military campaign and only wants Iran to negotiate to limit military escalation. But with the bloodthirstiness of Israel and Iran, the worst could still happen.
In conclusion, I believe that the economic game is very close to a reset button as countries continue to exploit the current chaos to spark more wars in all regions. Continuing to listen and having an appropriate asset allocation strategy will help mitigate the negative impact on your assets. Stay vigilant because crises are opportunities to buy undervalued assets and quickly increase your wealth.
This is a personal opinion, hoping everyone will join the discussion.