Iran war: What is happening on day seven of US-Israel attacks?

Market structure: Immediate winners are integrated energy majors (XOM, CVX), oil services (SLB) and defence primes/ETF (LMT, RTX, ITA) due to pricing power and expected government spend; losers are airlines/travel (AAL, UAL, JETS), EM export/importers and regional banks exposed to FX stress. Strait of Hormuz disruptions put ~15–20% of seaborne oil flows at risk, pushing Brent volatility and forcing risk premia into commodities and flight‑to‑quality assets.

Risk assessment: Tail risks include a wider regional war (US ground invasion or targeted strikes on shipping/infrastructure) that could lift Brent >$150/bbl and cause persistent supply-chain shocks, or a rapid diplomatic de‑escalation that collapses risk premia; probability low-medium but P&L asymmetric. Time horizons: days – dislocations/flight-to-safety; weeks–months – commodity-price driven earnings revisions; quarters–years – capex reallocation to energy security and defense spending. Hidden dependencies: insurance/freight cost spikes, sanctions on banks, and energy storage/backfill capacity.

Trade implications: Expect cross-asset: bonds and gold up, equities down, USD strength, equity volatility elevated. Tactical plays should be calibrated to Brent thresholds (add risk if Brent >$95 for 3 sessions, unwind if Brent < $80 for 3 sessions). Use options (capped risk call spreads on energy, put spreads on equities) to monetize spikes while limiting time decay.

Contrarian angles: Consensus may overprice a permanent shock; SPR releases, OPEC incremental barrels, or rapid repair of chokepoints could normalize prices in 3–9 months — historical parallels (Gulf war, 2003) showed 6–12 month mean reversion. Defence reratings may be front‑loaded; prefer large-cap balance-sheet winners and use relative shorts in smaller contractors with single‑contract risk to capture mean reversion and crowding unwind.