Barclays: US-Iran conflict unlikely to end in next 12 months, oil exports near 85% of pre-war level

Barclays has assessed the ongoing conflict between the United States and Iran, stating that the probability of a resolution within the coming 12 months remains below 50%. In a newly released report, the bank described a protracted stalemate as the most likely outcome, marked by intermittent clashes and little progress in nuclear negotiations.

Outlook for US-Iran tensions

Barclays analyst Michael McLean reported that both Washington and Tehran appear to believe time works in their favor, lowering the chances of a rapid agreement. The bank suggested that the United States may be preparing for the possibility that this status quo persists through the end of President Donald Trump’s current term.

The bank outlined three scenarios for Washington: broadening military operations, maintaining the current approach, or opting for a unilateral withdrawal. Barclays deems the most plausible situation to be a continuation of mutual attacks, with the US retaining its hold over the Strait of Hormuz.

Expanding military operations carries the risk of Iranian retaliation and opposition from Gulf states, while a unilateral US withdrawal could see Washington lose control over the Strait of Hormuz and undermine its regional influence and international standing.

Historical patterns and conflict duration

Barclays referenced data from 95 interstate wars between 1823 and 2003. The analysis found that military conflicts lasting 6 to 12 months had a roughly 57% chance of ending in the following year. For wars reaching their eighth month, the average continuation period was an additional 1.8 years.

Oil exports and economic influence

According to Barclays, oil exports from the Middle East have recovered to approximately 85% of levels observed before the conflict. The report also noted greater global resilience against sudden spikes in oil prices.

The resurgence in oil flows is reducing the economic pressure on both parties to reach a rapid agreement. For the United States, the possibility of losing control over the strategic Strait of Hormuz continues to pose significant risks, even if the conflict remains unresolved over a long period.

Barclays further suggested that if Middle Eastern oil exports continue to recover, pressure on Bitcoin and other cryptocurrencies could remain limited. However, new attacks disrupting shipments through the Strait of Hormuz could send oil prices sharply higher, intensifying inflation concerns in the United States and fueling expectations of interest rate hikes from the Federal Reserve.

Such a scenario would likely dampen risk appetite among investors and increase selling pressure in both Bitcoin and various altcoins.

If oil exports in the Middle East sustain their recovery and no new attacks disrupt shipments, the impact on Bitcoin and other cryptocurrencies may remain moderate. However, significant interruptions at the Strait of Hormuz could heighten inflation worries in the US and trigger stronger demand for further rate increases from the Federal Reserve.