Key insights
- The author speculates that a hypothetical US military and economic setback in the Middle East, followed by a US troop withdrawal, would lead to Iran becoming the dominant regional power. This scenario anticipates lower oil prices and increased geopolitical instability, potentially creating risk-off sentiment in US equity markets due to heightened uncertainty.
Assuming - over the next two or three weeks - the US and Israel are furthered battered militarily and economically, and the US suffers terrible casualties from a foolhardy Iran incursion, my title's likely the best the world can hope for. Humiliating for an aware person, but I think Trump's far gone enough that he'll just move on to some other foreign escapade.
So, if Trump simply withdraws all US troops from the Gulf and Iraq, Iran quietly agreeing to stand down for 48-72 hours, leaving battered and destroyed US bases behind forever, where does that leave the Middle East?
The Strait of Hormuz will be Iran's permanent tollbooth. Internally and externally weak Gulf states will need to quickly accommodate to Iran, the local hegemon. Israel won't be able to touch Iran anymore, but for the moment will stay strong in its immediate neighborhood. Gas and oil prices will drop but not plummet.
Fog of war is thick still but these are my educated guesses.