Trump does not have a "quick victory"! Global markets face the "Iran impact," with the focus on "duration"

“Trump says no ceasefire until goals are met! Iran states the timing of a ceasefire depends on Iran.” The latest confrontational statements from the US and Iran have completely shattered market expectations for a quick resolution.

According to CCTV News, on March 1 local time, U.S. President Trump delivered a video speech stating that the U.S. and Israel will continue military actions against Iran until all objectives are achieved. Iranian Foreign Minister Araghchi said that Iran will decide when and how this imposed invasion war by the US and Israel will end.

Trump’s latest statement is a clear escalation from previous remarks. He recently claimed that Iran “is a major power,” and that military operations might take about four weeks, or even less. Additionally, regarding the conflict, Trump stated that U.S. forces have sunk nine Iranian vessels, “virtually destroying Iran’s navy headquarters.” The U.S. military claimed to have destroyed the headquarters of the Iranian Islamic Revolutionary Guard Corps and denied that the aircraft carrier Lincoln was hit by Iran. Iran’s IRGC responded that their counterattack has caused “560 U.S. casualties” and shot down more than twenty US and Israeli drones.

As the duration of the conflict extends, Wall Street’s pricing logic instantly changes. Goldman Sachs warned in a recent report that the “duration” of the conflict has replaced “the outbreak itself” as the key variable determining the direction of crude oil, gold, and US stocks.

Hormuz Strait: Being “Avoided” Rather Than “Closed by Force”

After the outbreak of conflict, global attention has focused on the strategic chokepoint of the oil market—the Strait of Hormuz. Located in southern Iran, this narrow waterway is a critical route for about 20% of global oil transportation.

Bloomberg columnist Javier Blas pointed out that despite extreme market panic, a key fact must be clarified: The disruption of shipping through the strait is a result of “commercial fears,” not a “physical blockade.” From a macroeconomic perspective, the energy market outlook remains under control.

“Iran has not weaponized its oil nor closed the strait. Israel and the US have not attacked Iran’s oil infrastructure.” Blas analyzed that the current significant decline in shipping volume is more a “self-imposed” pause by the market. At this stage, he describes the situation as twofold:

• Shipping volume has significantly decreased: he notes that “shipping has greatly declined,” but a few oil tankers still pass safely “overnight.”
• No actual “closure” of the strait has occurred: “Despite sensational claims on social media, Iran has not closed the strait.”

Blas further added that the current partial suspension is more like a “self-imposed” pause: on one hand, insurers are withdrawing coverage; on the other, there is a halt prompted by “US Navy requests in the initial hours of conflict.” He also pointed out that some of the shipping slowdown is due to pre-shipment ahead of the conflict, with “February’s Persian Gulf oil exports nearly 10% higher than the previous month,” with many shipments already departed. But he warned that if Washington cannot quickly convince shipping companies of the strait’s safety, the “self-imposed” pause could turn into a real supply disruption.

Blas believes that when markets reopen, oil prices could jump 10%-15%, with Brent crude possibly exceeding $80 per barrel. However, due to the US shale oil revolution and ample current oil supplies, the global economy may not be severely affected.

And the two biggest concerns in the market—systemic attacks on energy infrastructure and forced disruption of tanker routes—“have not yet happened, at least for now.”

Goldman Sachs: Duration of the conflict will determine asset trends, possibly repeating 2022 scenario

If the Strait of Hormuz determines the short-term price surge, then the “duration” will decide the asset pricing paradigm. Goldman Sachs’ strategy team stated in their latest report that only when oil supply disruptions shift from a “short-term spike” to a “sustained blow” will markets face real damage.

Goldman Sachs specifically warns investors to beware of a return to the “2022 energy shock scenario,” which is far more dangerous than a simple price increase: the current macro environment bears a striking resemblance to the early stages of the Russia-Ukraine conflict in 2022, and may be even more complex.

• Stronger inflation stickiness: Unlike a few years ago, the current fundamental inflation dynamics have undergone structural changes.

• Dual drivers of fiscal spending and AI investment: US fiscal expenditure remains high, coupled with massive investments in AI infrastructure, keeping inflation expectations elevated.

• Dilemma for central banks: If a prolonged “cost-push” energy inflation occurs, this combined effect could lock the Fed out of rate cuts. Goldman warns that if supply shocks persist, markets will struggle to be confident about the medium-term interest rate direction, leading to sharp increases in rate volatility rather than just rate hikes or cuts.

For various assets, Goldman’s outlook:

Crude Oil: Worst case is a “sustained complete disruption” of Hormuz oil flows

Goldman’s commodities team highlights that their key risk scenario involves “a sustained complete disruption” of oil flows through the Strait of Hormuz. The report notes that “these disruptions have already begun,” but the core question is “how long they might last.”

This aligns with Bloomberg’s market focus: even if oil prices jump at opening, the real determinant of whether volatility prolongs will be the recovery of shipping, insurance, and energy infrastructure, and whether further targets are added to the attack list.

Gold, Silver, and Copper: Goldman includes them in a “10% further rise” scenario

The report mentions that using the GSTOT framework to assess spillover effects of commodity shocks, a scenario is presented where gold, silver, copper, and oil all rise another 10%. Goldman emphasizes that if commodity shocks are more persistent, the redistribution effects may re-emerge in the market.

Regarding gold, silver, and copper themselves, Goldman seems to suggest two points:

• Once commodity prices shift from a “short-lived spike” to a “sustainable upward move,” asset prices will shift from purely safe-haven to a more complex “inflation-growth-distribution” mix;
• In this environment, market distribution widens, and trading volatility and hedging demands become harder to revert to pre-conflict levels.

US Stocks: Mainly negative, but “significant consequences” require more extreme, longer-lasting oil disruptions

Goldman states that for stocks and credit, such risks and growth shocks are “obviously negative”; but only a “severe and sustained” oil supply disruption (like in 1990 or 2022) would significantly impact the global growth outlook.

In sector and style terms, Goldman’s differentiation path is clearer:

• “Cyclical sectors” may face pressure, especially consumer-facing industries (including airlines) and industrial oil users;
• Energy producers are relatively favored;
• Some of the early-year rally sectors may become more vulnerable due to “position adjustments.”

Forex Market: USD/JPY as the preferred safe haven

In FX, negative supply shocks and growth risks initially will dominate the ToT (Terms of Trade) distribution effects. The report states: “In an environment of risk aversion and rising oil prices, the USD and JPY may become the preferred safe assets.”

US Treasuries: Oil-driven price increases may lead to “less rate cuts at the short end, flatter curves”

In rates, Goldman emphasizes the “tug-of-war” between rising inflation and slowing growth. Past studies show that a 10% rise in oil prices typically pushes the 2-year breakeven inflation rate up by 15-20 basis points; the impact on 2-year nominal yields is smaller, around 5-10 basis points.

More importantly, traders should watch the curve shape. Goldman notes that supply shocks more often lead to “front-end flattening”: inflation limits short-term rate cuts, while growth risks restrain longer-term yields. Under this logic, Goldman suggests the recent US curve “front-end flattening, with the 5-year segment relatively outperforming,” may continue initially.

They also warn that if markets start pricing in higher probabilities of “prolonged conflict,” increased volatility could pressure swap spreads and other derivatives; overall, near-term rates may face higher volatility.

Europe faces hawkish risks

In Europe, although high energy prices pose negative trade shocks, Germany’s fiscal expansion is entering the real economy.

Goldman believes: “This combination introduces hawkish risks for the euro front end, and although historically this might flatten the curve, negative risk sentiment could help anchor long-term yields.”

Considering lessons from the 2022 energy shock, if cost-push energy inflation persists, higher fiscal spending could push inflation expectations higher. This makes markets less confident about the medium-term interest rate outlook, implying higher rate volatility.