Review the development of the Middle East incident and its impact on the subsequent market.

From different perspectives

1. From Iran’s perspective

1. During negotiations, Iran was passively drawn into conflict and subjectively considered the victim.

2. The level of conflict is the worst since 1980, with irreversible losses (high-level casualties).

3. Internal factions are divided; the government has pro- and anti- factions, the Revolutionary Guard is hardline, and in chaos, the military is likely to remain tough.

4. Iran’s missile stockpiles are limited; they cannot attack indefinitely, and the returns are small, so the arsenal is not Iran’s biggest card.

5. The probability of the Iranian government officially announcing a blockade of the Strait of Hormuz is low, as it violates international law and opposes most countries, making Iran a target.

6. However, the Strait of Hormuz is Iran’s biggest card. Before entering negotiations, this is the only useful card. The most likely scenario is an unofficial blockade through Revolutionary Guard harassment, pressuring shipping and insurance companies, creating a de facto blockade.

7. How difficult is it for Iran to blockade the Strait of Hormuz?

Iran controls the entire northern coast; the narrowest part of the Strait is 25 km, with shallow waters. The narrowest navigable channel for oil tankers is only 4 km, including threats like mines, fast boats, drones, and missiles, which can create deterrence and achieve a de facto blockade with moderate difficulty.

8. Besides blocking the strait, does Iran have other options?

Yes, missile attacks on oil fields in neighboring countries, causing factual oil production halts—this is a last resort, irreversible, and a bargaining chip, but its use is unlikely.

9. What is Iran doing now?

Selecting the Supreme Leader; the timing should be soon, but the exact date is unknown. The subsequent course depends on who becomes the Supreme Leader. If it’s Khamenei’s son, it would be a matter of national hatred and a major negative signal.

10. Ultimately, the situation will return to negotiations; neither side has the motivation for prolonged war.

Iran’s national strength and U.S. midterm elections are constraints, and both sides are aware of this.

2. From the U.S. perspective

1. During negotiations, the U.S. launched attacks, seeing a good opportunity.

2. The subsequent developments, especially Iran’s counterattacks, exceeded expectations and did not follow Trump’s plan of quick regime change.

3. U.S. public support is low; 54% oppose, over half, while only 27% support, with others remaining neutral.

4. A significant rise in oil prices would further fuel inflation and harm Trump’s midterm prospects.

5. Two urgent issues:

   • Avoid prolonging the conflict; find an exit and resolution.

   • Prevent oil prices from rising further.

   These are core factors affecting Trump’s approval and decision-making.

6. How likely is the U.S. to successfully escort ships through the Strait of Hormuz without deploying ground troops?

Not high; the risk of real-time disruption is due to danger, leading insurance and shipping companies to withdraw proactively. Escorting cannot eliminate risks, and U.S. forces would be exposed to Iranian anti-ship missiles.

7. What’s the probability of deploying ground troops?

Almost zero, contradicting Trump’s policies.

Ground troops would suffer casualties, and if publicized, it would likely lead to a midterm election defeat.

8. Are there other ways to suppress oil prices?

Treasury Secretary Yellen mentioned using futures and financial markets to suppress prices, which is a main reason for today’s oil price drop, but the actual effectiveness and methods are uncertain.

9. What is the U.S. doing now?

Waiting for Iran to select a new leader; until then, actions have no decisive impact on the situation.

3. From Israel’s perspective

1. The primary initiator and biggest beneficiary of this event.

2. The only winner if the war continues, so Israel has reason to act during this vacuum period, such as weakening Iran’s military capabilities.

3. Very low willingness to negotiate.

4. From the perspective of Gulf countries

1. Tolerated the conflict initially but did not intervene publicly.

2. Victims of the conflict; the Strait blockade prevents oil shipments, akin to “stealing from the poor to benefit oneself.”

3. Currently lack the capacity to influence the situation; only able to cheerlead and passively follow.

5. From our country’s perspective

1. About half of our crude oil and 30% of natural gas imports come from the Persian Gulf.

2. The impact of a strait blockade is significant; our strategic reserves can supply approximately 90 days.

3. We will absolutely not allow more than 40 days of factual oil supply disruption from the Persian Gulf to China; this is a bottom line.

4. Will use various methods, including mediation and special transit arrangements.

In summary, based on the above analysis, some expectations:

1. The Middle East incident is unlikely to calm down in the short term (1-2 weeks). The most volatile factor is oil prices; the longer it drags, the greater the impact. Oil and shipping markets will experience intense fluctuations in the short term.

2. Tech stocks, even if resilient, are under pressure; the longer the delay, the more negative sentiment grows. Even without Middle East events, tech stocks face significant stress. Gains are limited to AI and hardware sectors, but they are also under pressure due to uncertain outlooks.

3. I believe the negative factors are not exhausted, so this is not an ideal entry point for a reversal. Yesterday’s rise was merely a rebound.

Possible impacts of future developments:

1. Iran elects a new Supreme Leader; if it’s someone like Khamenei’s son (highly probable), it would be a matter of national hatred, not an immediate collapse, representing the worst outcome.

2. If factual blockade lasts two weeks with no signs of resolution, markets will start to worry.

   • Four weeks of blockade could trigger panic.

   • Over eight weeks, it would be a global economic disaster, as worldwide oil reserves only last 60-90 days.

3. From the second week onward, negotiations will begin, involving many stakeholders, including us.

4. Ultimately, it will become a game of cowards, with the battlefield initiative in the U.S., but timing in Iran.

5. Signs of easing might be the real reversal point for tech stocks.

Personal opinions for reference only.