President Donald Trump’s recent statement that the war with Iran is “pretty much” over has sparked strong reactions across financial markets. However, analysts at BCA Research are warning investors to remain cautious despite the initial optimism.
According to Matt Gertken, Chief Geopolitical Strategist at BCA Research, Iran may still respond with a final show of strength before any potential negotiations begin again. He noted that if Trump signals victory and offers to reopen diplomatic talks, Iran could launch a symbolic retaliation to demonstrate its influence both domestically and internationally.
In a research note, Gertken explained that Iran has incentives to extend the economic and political consequences of the conflict. He suggested that Tehran is unlikely to agree to a ceasefire without first ensuring that the United States faces greater costs from the confrontation.
For investors, the key signal to watch is not Trump’s declaration of victory, but rather whether Iran decides to halt its attacks and return to negotiations.
Earlier in the week, global markets reacted sharply to the possibility of a prolonged disruption in the Strait of Hormuz, a critical shipping route for global oil supplies. Concerns about a potential closure of the strait triggered volatility in energy markets and broader financial assets.
While some market participants believe the United States may be seeking a diplomatic exit from the conflict, BCA Research believes Iran could still temporarily escalate tensions.
The firm estimates a 70% probability that oil supply disruptions could continue, compared with only a 30% chance of a quick diplomatic resolution.
Even if negotiations resume soon, the report suggests that Iran may continue to create periodic regional tensions. Such actions could be aimed at maintaining strategic leverage, particularly ahead of upcoming U.S. midterm elections.
Given the ongoing uncertainty, BCA Research advises investors to maintain a defensive investment strategy. Gertken recommends reducing, but not fully eliminating, exposure to oil-related assets while keeping a higher allocation to cash until Iran signals a genuine ceasefire.
