No-war-no-peace; active phase ends ~Nov 2026–Feb 2027
Aug 16 redline passes without full compliance; renewed US strikes late Aug/Sep; Iran absorbs and sustains low-grade Hormuz pressure; mutual economic exhaustion by Q4 produces a second MoU or de facto quiet neither side calls a treaty — the Tanker War signature. Guarantor state (Pakistan/Qatar/Oman/Egypt) brokers; terms deliberately ambiguous; nuclear file deferred to phase two.
De-escalation 25% — clean second deal
A second framework that actually implements
A negotiated framework lands and implements: Hormuz demining verified, frozen-asset release scheduled, monitored commercial passage. Requires a Tehran decision structure able to deliver compliance — the main open question given the Mojtaba Khamenei succession.
Wider war 20% — sustained closure
Escalation spiral, prolonged Hormuz disruption
A high-casualty strike on US personnel, an attack on Gulf civilian water/energy infrastructure, or direct Israel–Iran escalation tips the conflict into sustained widening with a prolonged strait closure. Highest-impact tail for oil. Tracked live in the Danger Window below.
Regime fracture 5% — Tehran breaks
Fast end — or Syria-ization
Succession stress fractures the decision structure. Cuts both ways: a fast end if a consolidated faction deals, or Syria-ization if no one can deliver compliance — the Vietnam-'73 problem.
WhyOil is not the objective but the binding constraint on both war economies: Iran funds the regime through exports; the US faces a political ceiling on elevated crude into the midterms; China's dependence on Iranian barrels gives it veto-adjacent leverage against full closure. Shared dependence sets a ceiling on escalation (the strait never fully closes) and a floor under capitulation (neither side can surrender oil-linked leverage). Net: a bounded but durable grind ended by economic exhaustion. Key variable: the Mojtaba succession — a fractured Tehran cannot deliver compliance, which is the main argument against a fast ceasefire.
Reference class: compellence war over a chokepoint (Tanker War 1984–88, armistice conflicts — median durations in years). Reclassified Jul 19 from "resource war," a scored methodology error logged on the Audit Trail. The dated, falsifiable version of this call — and a competing external-model call — are registered there with pre-set resolution criteria.
Danger windowExpires Aug 16
Maximum-miscalculation period runs through mid-August. Three triggers, each feeding the wider-war tail if hit — any trigger firing immediately re-weights Wider war above 20% and is flagged on the homepage. (Credit: external model input.)
NOT FIRED
High-casualty strike on US personnel
NOT FIRED
Major attack on civilian Gulf water / energy infrastructure
NOT FIRED
Direct Israel–Iran escalation
Falsifiable markers
Aug 16 redline→Strikes vs. quiet extension. Extension = base case on track but shortens the timeline toward the external model's Aug–Sep window.
Mojtaba signal→Publicly endorses or undercuts any second framework. Rejectionist consolidation = extend all timelines ~1 year.
IRGC naval posture→Harassment level vs. escalation to mining. Mining feeds the wider-war tail.
Iranian export volumes→Tanker-tracking + China discount spreads. If barrels keep moving despite the blockade, the exhaustion clock isn't running — extend the timeline.
AI Predictive IntelligenceAI PREDICTIVE INTELLIGENCE
The base case appears broadly reflected in pricing: VIX ~18 alongside a collapsed ceasefire is consistent with markets trading the bounded-grind scenario. The widest gap between priced and modeled outcomes sits in the ~20% wider-war scenario. AI/power-infrastructure remains the segment least exposed to the conflict — domestic capex, power-constrained rather than oil-constrained — with its principal sensitivities being positioning and hyperscaler capex guidance rather than Hormuz. If the external model's timing proves right, the war-premium adjustment would begin roughly a quarter earlier than the M3I timeline implies. Aug 16 is the key observable date either way.
The flashpoints5 tracked
88
SEVERE
US–Iran / Hormuz ▲Brent crude
CEASEFIRE OVER (Jul 8): Trump declared the Jun 17 MoU 'over' after the US struck 80+ military targets in Iran (Jul 7), retaliating for IRGC strikes on ~3 tankers in Hormuz. Oil +6%; naval blockade threatened. Open conflict resumed.
US strikes 80+ targetsCeasefire 'over'Oil +6% / blockade
60
HIGH
Russia–Ukraine / NATO ▲Brent · EU gas · defense
Russia's deadliest Kyiv strikes in days (Jul 6, 20+ killed; Jul 2, 31 killed), even as Trump held separate Putin and Zelensky calls Jul 5 to seek an end. EU released $4.4B for Ukrainian drones.
Kyiv strikesEnergy / gasTrump-brokered calls
44
ELEVATED
China–Taiwan ▬SMH · TWD
PLA incursions have eased off their 2024–25 peak (12 days with no median-line crossings in June), but carrier transits are normalizing and Taiwan approved a $25B defense boost. Grey-zone pressure, no kinetic — the market's largest structural tail.
PLA incursionsSemis / TSMCCarrier transits
46
ELEVATED
US–China trade & tech ▬SOX · SMH · FXI
Managed friction: H200 sales to China allowed under volume caps alongside a 25% tariff on advanced chips; Nvidia's China share has halved to ~50%. Structural overhang on semis, not kinetic.
Chip export controls25% chip tariffRare earths
38
MODERATE
Red Sea / Houthis ▬Freight · Brent
The Houthis declared an end to Red Sea attacks, but a Jul 5 skiff attack off Hodeida and standing threats to resume keep the Suez reopening fragile.
Shipping / SuezFreight ratesHouthi threats
Bands: 0–25 Low · 25–40 Moderate · 40–60 Elevated · 60–75 High · 75–100 Severe. Each score blends kinetic activity, diplomacy trend, and a market proxy; the composite weights them by market impact.
The call that resolved
US–Iran deal by ~July 31
Predicted → CONFIRMED Jun 17, 2026 · ~6 weeks early
CONFIRMED ✓
The model's US–Iran resolution call was CONFIRMED on Jun 17, when Trump signed the 14-point MoU at the Palace of Versailles (Pezeshkian counter-copy via IRNA; the G7 statement praised the deal; the naval blockade lifted) — ~6 weeks ahead of the model's ~Jul 31 window. It now sits in the track record; the US–Iran / Hormuz flashpoint above carries the forward, live read on the theater. See the Audit Trail →
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