A chief sticking point in the talks was Iran’s insistence on retaining the ability to develop a nuclear weapons programme, with other unresolved issues likely compounding the breakdown. With diplomacy stalled, attention now turns to the likely next phase of the conflict.

In the short term, the firm assesses that the most plausible outcome is a United States (US) strategic withdrawal. The central question around that is how much damage it seeks to inflict on Iranian infrastructure before doing so. The underlying calculation appears to be that sufficiently severe strikes could set back Iran’s offensive capabilities for several years.

At the same time, pressure is likely to build on Tehran from major economic partners. China and India, both disproportionately heavily exposed to energy flows through the Strait of Hormuz, have strong incentives to prevent prolonged disruption. Under such pressure, Iran may move to ease restrictions on shipping through the strait in an effort to limit further US retaliation and contain the ensuing economic fallout.

This firm’s view therefore continues to see a near-term dynamic defined by a combination of US disengagement and partial dethrottling of Hormuz traffic, rather than escalation into a crippling long term ground conflict that spikes energy prices. Risks around the reliability of Hormuz as an oil transit point will however remain elevated for a considerable period – and might, in fact, never be resolved.

Over the longer term therefore the note argues that continued uncertainty around Hormuz is likely to accelerate global efforts to bypass the chokepoint altogether. China may increase investment in alternative supply chains, including Russian and African crude as well as domestic production. Gulf states will expand pipeline infrastructure, while Europe may look to revive its own energy production and deepen purchases from the US.

The result would be a gradual erosion of Hormuz’s strategic leverage, driven not by military outcomes but by market adaptation. From Washington’s perspective, the firm concludes, such a shift would represent a significant geopolitical gain, reshaping global energy flows in ways that favour American supply and reduce reliance on vulnerable transit routes.