Trump is facing an increasingly patient Iran

The market is likely underestimating how quickly a “contained” maritime conflict can morph into a persistent inflation shock without a full energy embargo. The key second-order effect is not just crude higher; it is the repricing of transport, insurance, and working capital across every goods chain that touches the Gulf, which hits margins long before headline CPI fully catches up. That creates a negative convexity setup for cyclicals: the longer the standoff lasts, the more the cost burden shifts from energy producers to import-heavy retailers, industrials, and airlines.

The regime’s improved internal cohesion matters because it reduces the probability of a fast diplomatic off-ramp. When external pressure hardens domestic politics, the usual assumption that economic pain forces moderation fails; instead, it can prolong confrontation as leaders treat concessions as regime risk. That means the near-term trade is not “peace premium” fading, but a volatility regime with episodic escalation risk over days/weeks and a slower burn inflation impulse over 1-3 months.

Contrarian angle: consensus may be too focused on the Strait as an on/off switch for oil. Even partial disruption can sustain elevated tanker rates, widen WTI-Brent localization, and keep refined product spreads bid without requiring a total closure. If insurance and scheduling frictions persist, the more durable winner is logistics bottlenecks, not necessarily upstream crude beta; the loser is any business with inventory turns, just-in-time sourcing, or fuel-sensitive demand elasticity.

The policy risk is that U.S. political pressure eventually caps the escalation, but that likely arrives after markets have already re-rated inflation expectations and duration. The better expression is to own optionality on continued disruption while fading overextended outright energy beta if prices already discount full closure. In other words: pay for convexity, don’t chase spot.