After Trump's Strike On Iran, This Is How Crude Price And Equity Market Could Go

Why do global markets remain calm after the U.S. Strike on Iran's nuclear facilities?On June 21 local time, U.S. President Trump posted on his social media platform "Truth Social," stating that the U.S. had completed strikes on three Iranian nuclear facilities in Fordow, Natanz, and Isfahan, and declared that "Iran's Fordow (nuclear facility) is gone."However, the global financial market's reaction to the U.S. strike on Iran's nuclear facilities was relatively muted: On Monday, U.S. stock futures opened lower but narrowed their losses, while crude oil and gold prices surged before retreating and turning negative. As of 1 p.m., the global MSCI index had fallen by only 0.12%.Traditional safe-haven assets showed mixed performance: the yen fell 0.64% against the U.S. dollar, spot gold prices dropped 0.23% to $3,360 per ounce, and the U.S. dollar index rose 0.35%.Analysts speculate that the market volatility following this U.S. military action was significantly smaller, primarily because investors expect the Trump administration's military intervention to be short-lived, aimed at deterrence rather than prolonged conflict.Geopolitical Risks Seen as ControllableThe muted market reaction to the U.S. military action stems mainly from investors' optimistic expectations about the scope of the conflict.Dan Ives, Managing Director at Wedbush, said the market views the strike on Iran as positive news because the nuclear threat in the region has been eliminated.He further stated that there are currently no signs of the Iran-Israel conflict spreading to a broader regional conflict, making the impact of the event relatively "isolated."Other industry experts generally agree that while the situation is serious, it does not pose a systemic threat to global markets, which is why investor confidence remains largely intact.Peter Boockvar, Chief Investment Officer at Bleakley Financial Group, noted that everything depends on how Iran responds. If Iran accepts the end of its military nuclear program, this could mark the end of the conflict, and the market would remain stable.According to Boockvar, Iran is unlikely to take actions that disrupt global oil supplies.Michael Hartnett, Chief Investment Strategist at Bank of America, expects any U.S. military action against Iran to be short-lived, as Trump does not want U.S. gasoline prices to exceed $4 per gallon.Hartnett predicts that Trump will continue to pressure Russia and Saudi Arabia to increase oil production.What Are the Risks of Iranian Countermeasures? Strait of Hormuz in FocusAlthough Iran's parliamentary approval of a resolution to close the Strait of Hormuz has drawn attention, the market has not overreacted.Experts generally believe the likelihood of Iran actually closing the strait is low.Marko Papic, Chief Strategist at GeoMacro Strategy, said the market remains calm mainly because Iran's countermeasures are "limited." If Iran were to close the strait, oil prices would rise above $100, panic would take over the market, stocks would fall by at least 10%, and investors would flock to safe-haven assets—but this scenario is unlikely.Historical data supports this view: Iran has repeatedly threatened to close the Strait of Hormuz but never followed through.After the U.S. withdrew from the nuclear deal and reimposed sanctions in 2018, Iran issued similar threats. In 2011 and 2012, senior Iranian officials, including then-Vice President Mohammad-Reza Rahimi, also stated that Iran might close the waterway if Western countries imposed further sanctions on its oil exports due to nuclear activities.Papic pointed out that Tehran understands that closing the strait would invite "swift, punitive, and brutal" retaliation from the U.S.Three Possible Oil Price Scenarios After U.S. ActionMorgan Stanley outlined three scenarios in its latest report to assess the impact of geopolitical risks on oil prices. The bank's commodity analyst Martijn Rats believes these three scenarios will determine the future trajectory of oil prices.The first scenario assumes military conflict will not disrupt oil flows. If exports from the region remain unaffected, Brent crude could fall back to $60/barrel. The second scenario considers the possibility of a significant reduction in Iranian exports, which could eliminate next year's global supply surplus, with oil prices trading in the $75–80 range.The third scenario anticipates that the conflict could eventually put broader Gulf oil exports at risk. In this case, a repeat of 2022's high oil prices is not impossible. In 2022, due to the Russia-Ukraine conflict, international oil prices briefly surged to nearly $140.The bank noted that the key to oil price movements lies in whether the changes are temporary or permanent. Although recent oil price increases have drawn attention, the rise has been relatively modest compared to early April. WTI crude futures have risen about 10% over the past week, while Brent crude futures have climbed 18% since June 10.Long-Term Bullish Outlook for U.S. Stocks Remains OptimisticSome analysts believe the latest geopolitical events will not alter the long-term upward trend of U.S. stocks.Ed Yardeni, founder of Yardeni Research, said the event has not shaken his confidence in the U.S. bull market.He believes Trump has reasserted U.S. deterrence through military action, enhancing the credibility of the "peace through strength" mantra, and expects the S&P 500 to reach 6,500 by the end of 2025.Yardeni also noted that with Iran's nuclear facilities destroyed, the Middle East could see "fundamental changes." While short-term market volatility due to uncertainty is possible, the long-term outlook suggests investor confidence could recover further if the conflict is contained.Currently, the market's low expectations of Iranian countermeasures and the perception of a controllable conflict underpin this cautiously optimistic sentiment.