US, Iran Step Up Attacks as Fears Grow of Return to Full War

Summary

Ilan Goldenberg, SVP at J Street, analyzes the escalating US-Iran conflict and its market implications, arguing that the US faces no good options and oil prices are settling into a higher new normal ($80–100) with a real risk of spiking to $200 as shock absorbers are depleted. Over the long run, Gulf nations are building pipeline alternatives that will erode Iran’s Strait of Hormuz leverage.

• The US-Iran conflict has reverted to early-war dynamics, with threats of escalation to civilian targets.
• Goldenberg sees no viable US option; both cutting a deal and military pressure are deeply problematic.
• Oil prices are expected to stay elevated around $80–100/barrel as a new normal.
• A return to sustained hostilities could drive oil to $200 due to diminished market buffers (strategic reserves, China demand cuts).
• Long-term, Saudi Arabia, UAE, and others are building bypass pipelines, reducing Iran's leverage over the Strait of Hormuz.
• Political sensitivity around oil and Israel’s role continues to weigh on the conflict’s trajectory.