by Bryan Perry
June 17, 2025
The events of the past week, now emerging as a fully declared war between Israel and Iran, are hugely unsettling. As we open this market week, we don’t know how this highly fluid situation will play out.
The proxy wars involving Hezbollah, Hamas and the Houthis against Israel have recently been relatively contained, but this new war between the two principal nations has the look and feel of a longer timeline.
This new engagement with Iran is over what Israel calls an “immediate operational necessity” to neutralize Iran’s advancing nuclear weapons program, with Prime Minister Benjamin Netanyahu claiming that Iran was nearing the “point of no return” in its nuclearization efforts. Hence the pre-emptive strike on June 13, dubbed “Rising Lion,” with the goal of preventing Iran from establishing its nuclear arsenal.
No political scientist can possibly model a plausible outcome of this war at this time, with Iran vowing to target assets of the United States and any other nations that show support for Israel. Leave no doubt, this is a nation with a fanatical Islamic leadership that has taken the Iranian population hostage
It is widely understood that Iran’s leadership, especially the leading figures within the Islamic Revolutionary Guard Corps (IRGC) and the Supreme Leader’s circle, project a hardline, ideological stance, while the general population is far more diverse in its beliefs, values, and aspirations.
That’s why Israeli Prime Minister Benjamin Netanyahu has framed his nation’s air strike as a message to the Iranian people, encouraging them to rise against what he called an “oppressive regime.” This suggests a secondary goal of weakening the Islamic Revolutionary Guard’s hold over the regime’s power.
Could Iran’s populace be on the cusp of its own “Liberation Day”? Possibly so, if the U.S. gets involved, but after our protracted wars in Afghanistan and Vietnam, the majority of Americans have no appetite for any future “forever wars” that cost hundreds of billions to fund, often resulting in horribly chaotic exits. But if the full weight of the U.S. military is levied, in coordination with Israel to destroy Iran’s nuclear program and energy infrastructure, this war will likely end much sooner than many now predict.
To this point, Israel’s strike on the world’s largest gas field and Iran’s energy infrastructure, as part of a two-day assault, reveals the next phase of Israel’s battle plan. It was reported on Saturday that an Israeli drone struck Iran’s South Pars Gas Field, which is shared with Qatar, where it is called the North Dome Gas Field. The attack targeted Phase 14 refineries of the Iranian section. The Iranian Petroleum Ministry confirmed these strikes against the South Pars Oil Field and the Fajr Jam Gas Refining Company.
The narrow Strait of Hormuz waterway is Iran’s main artery for oil exports. Just 33 kilometers (20 miles) wide at its tightest point, it is the only sea route out of the Persian Gulf. Roughly 20% of the world’s oil passes through it, including most of Iran’s 2+ million barrels per day that accounts for 90% of Iran’s total oil production. Cutting off Iran’s ability to export its oil adds a new element of geopolitical risk.
Any threat by Iran to cut off access to the Strait of Hormuz would not only choke off revenue that accounts for around 19% of Iran’s GDP, but also provoke a military response from the U.S. and its allies.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
By definition, this creates a hot mess coming into the new week. In reaction to last week’s shock, and current events shaping the Israeli/Iranian war, gold and oil prices are trading higher, as are shares of gold, gold mining, crude-related energy and aerospace defense stocks and ETFs. All are under accumulation.
Ironically, the U.S. dollar and U.S. Treasuries with maturities of seven years (or longer) sold off last week in what looks to be a bearish response to the likely passage of the “One Big Beautiful Bill” that could add trillions to the deficit over the next decade – with Moody’s carrying the highest estimate.
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