Barclays Sees U.S.-Iran Standoff Potentially Lasting Through Trump’s Term

Barclays analyst Michael McLean sees a U.S.-Iran standoff potentially stretching through President Donald Trump’s term, with the bank assigning less than a 50% chance that the conflict ends within a year.

Barclays lays out three possible paths: further escalation, a prolonged status quo or a U.S. withdrawal. Its baseline is that the sides continue intermittent reciprocal strikes, nuclear talks make little progress and the United States retains control of the Strait of Hormuz.

McLean’s assessment reflects the view that both sides believe time is on their side, leaving little prospect of a substantive agreement in the near term. Barclays says Middle East oil exports have returned to about 85% of prewar levels and the global economy is better able to absorb an oil shock. In the bank’s view, that leaves the parties with less pressure to end the conflict quickly.

Barclays sees risks in the alternatives to a prolonged standoff. Further U.S. escalation could bring Iranian retaliation and opposition from Gulf states. A unilateral U.S. withdrawal could cost Washington control of the strait and weaken its regional influence and international credibility. The bank considers those obstacles reasons the status quo is more likely to persist.