Why Global Markets Are Shockingly Unfazed by Iran’s Retaliation
Markets shrug off geopolitical firestorm—again. Here's the cold calculus behind the calm.
Risk algorithms vs. reality
Automated trading systems priced this in weeks ago. Human traders? Still pretending they're in control.
Liquidity heroin
Central banks keep pumping cheap money—because nothing says 'stable markets' like drowning every crisis in liquidity.
Crypto's perverse hedge
Bitcoin barely twitched. Either it's maturing as an asset class... or everyone's too busy chasing the next meme coin.
Wake us when the VIX actually spikes. Until then—back to your regularly scheduled complacency.
Traders ignore Iran’s warning to close oil chokepoint
Dan Ives, managing director at Wedbush, said Trump’s attack on Iran has actually eased concerns for investors.
“The markets view the attack on Iran as a relief with the nuclear threat now gone for the region,” he told CNBC. He also said he sees little chance of the conflict spreading further, calling the situation “isolated.”
Peter Boockvar, chief investment officer at Bleakley Financial Group, told CNBC, “It all depends on how Iran responds. If they accept the end of their military nuclear desires … then this could be the end of the conflict and markets will be fine.” Boockvar added that he doesn’t believe Iran will actually disrupt the oil flow.
Marko Papic, chief strategist at GeoMacro Strategy, spelled out the real danger. If Iran blocks the strait, oil will shoot over $100, stocks could drop 10%, and investors will run to safety. But, he said, this is highly unlikely. “Markets are subdued now given the limited tools Tehran has at its disposal to retaliate,” Papic said.
Iran’s threat to shut the strait isn’t new. They said the same thing in 2018 when the US left the nuclear deal. Back in 2011 and 2012, then–Vice President Mohammad-Reza Rahimi floated similar threats. Nothing came of them. Papic added, “Tehran understands that, if they were to close the Strait, the retaliation from the US WOULD be swift, punitive, and brutal.”
China’s dependence limits Iran’s options
The other factor keeping things calm is China. Iran relies heavily on China to buy its oil, and Beijing has no interest in a disrupted Gulf. Vandana Hari, founder of Vanda Insights, said on CNBC’s Squawk Box Asia that the chances of Iran actually closing the Strait of Hormuz are “absolutely minimalistic.” She warned that Iran would turn oil-rich neighbors into enemies and put its entire economy at risk.
Andrew Bishop, head of policy research at Signum Global Advisors, agreed. He said Iran won’t want to provoke China and risk retaliation on its oil infrastructure. “Disrupting supplies will also put a target on the country’s own oil production, export infrastructure, and regime,” he said, noting that both the US and Israel are currently “trigger-happy.”
Clayton Seigle, a senior fellow at the Center for Strategic and International Studies, explained that China depends not just on Iran but on oil from the whole region. “Its national security interest really would value stabilization of the situation and a de-escalation enabling SAFE flows of oil and gas through the strait,” he said.
While there’s no sign yet of military de-escalation, there’s also no sign of a blockade. The Joint Maritime Information Center confirmed that “US-associated vessels have successfully transited the Strait of Hormuz without interruption.”
Ed Yardeni, president of Yardeni Research, doesn’t think any of this has hurt the US bull market. “Geopolitically, we think that TRUMP has just reestablished America’s military deterrence capabilities,” he said. He expects the S&P 500 to reach 6,500 by the end of 2025, and he believes the destruction of Iran’s nuclear sites could lead to “radical transformation” in the region.
For now, investors are calling Iran’s bluff. Markets remain calm. crypto is steady. Oil still flows. And unless Iran does something more than talk, that’s unlikely to change.
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