FLASH

Military strikes against Iran – first thoughts
Guy Ertz, Deputy Global Chief Investment Officer, Stephan Kemper, Chief Investment Strategist, BNP Paribas Wealth Management, Patrick Casselman, Senior Investment Strategist PRB, and Alain Gerard, Senior Investment Advisor
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Key Messages

1. The United States and Israel launched joint military strikes against Iran over the weekend. Limited market reactions at this stage.

2. Base-case scenario: military operations and political uncertainty remain elevated short term, but shipping lanes and energy exports remain largely operational. Tensions ease and risk premium reduces soon.

3. In our two alternative scenarios, the risk is high inflation and sustained uncertainty. That environment would likely support the USD and limit its downside during the period. It is unlikely that central banks would react even in these alternative scenarios.

4. We upgrade Oil to Neutral from Negative with a short-term target of USD 80 for Brent. However, we keep our mid-term (12-month) target range of USD 60–70: once the Iran-related disruption risk eases, the market will focus on underlying overcapacity. 

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