The US-Iran war has entered its third week, and still, there are no signs of any de-escalation in this Middle East crisis. According to experts, the US-Israel-Iran war has created a complex geopolitical situation where different global powers have very different economic and strategic incentives. They said that Russia is the biggest beneficiary of this US-Iran war as soaring oil prices strengthen sanction-hit Russia’s energy revenues.
China can also reduce its energy security threat after the disruption in the Strait of Hormuz by drawing on its buffer oil stocks and Russian oil imports. Even the Iranian government would want to delay the end of this conflict and push the crude oil prices, as it would negatively impact Donald Trump’s party’s winnability in the mid-term polls scheduled in November 2026. Tehran has a belief that a U-turn by Donald Trump would establish its leadership in the Islamic world of the Middle East.
Why has the US-Iran war gotten overstretched?
On the reasons for the overstretched US-Iran war, Ponmudi R, CEO at Enrich Money, said the Middle East tensions involving the United States, Israel, and Iran have created a complex geopolitical situation in which different global powers have very different economic and strategic incentives.
Highlighting the Russian interest in a US-Iran war, the Enrich Money expert said, “Russia is arguably the biggest short-term beneficiary if the conflict continues. Higher oil prices strengthen Russia’s energy revenues at a time when sanctions are already straining its economy. At the same time, global attention shifting toward the Middle East could reduce pressure on the Russia-Ukraine conflict and potentially slow Western military support to Ukraine.”
US-Israel-Iran war: Challenge for China
Pointing to the threat to China’s energy security due to disruption in the Strait of Hormuz, Ponmudi R said that prolonged disruption in the Strait poses a direct risk to China’s energy security, given that a significant portion of its oil imports transit through this route. While a prolonged U.S. engagement in the Middle East could divert Washington’s focus away from the Indo-Pacific, Beijing would generally prefer stability in global energy markets.
However, Anuj Gupta, a SEBI-registered market expert, believes the threat to Chinese energy security due to the disruption in the Strait of Hormuz is temporary. Beijing can address the demand-supply imbalance by increasing Russian oil imports. Anuj Gupta also said that the Chinese government has been working on enhancing its oil storage capacity. So, it can also use the oil buffer available at its current oil storage.
Push to the US oil exports
Highlighting the benefits for the US from disruption in the Strait of Hormuz, Ponmudi R of Enrich Money said that higher oil prices may support alternative energy supply chains and increase exports from countries like the U.S. and Venezuela to Europe and Asia. He said that Donald Trump would love to have a bigger role in the global trade order for crude oil, where Middle Eastern countries are replaced by Venezuela and the US.
However, the US will have to pay for it. Soaring crude oil prices may lead to higher inflation, which could reduce the chances of a near-term US Fed rate cut.
Mid-term US election
SEBI-registered expert Anuj Gupta said the US Fed may have to delay rate-cut plans in the wake of higher inflation. This may go against Donald Trump’s Republican Party candidates’ winnability in the mid-term US polls. A weak performance by Donald Trump’s Republican Party would mean Democrats holding a majority in the US Congress, a scenario that could lead to the impeachment of the US President.
“Donald Trump is already facing opposition and public criticism for a series of controversial decisions like tariffs on trade partners, unnecessary aggression with long-term NATO allies via Greenland rant, publicly criticising institutions like the US Supreme Court, the US Fed, etc. If the US-Iran war gets overstretched, then its global competitors like Russia and China, who are expecting higher inflation, would benefit the opposition Democratic Party candidates. Even Iran is eyeing this, refusing to succumb to US pressure to reopen the Strait of Hormuz. Moscow, Beijing, Tehran and some other US-baiters like Cuba, Mexico, etc. are interested in overstretched US-Iran war, where Donald Trump may have to face impeachment, once his party loses majority in the US Congress,” said Anuj Gupta.
Nitant Darekar, Research Analyst at Bonanza, believes US President Donald Trump faces a delicate balancing act. A prolonged conflict-driven spike in crude would feed directly into headline inflation — precisely the vulnerability his opponents would exploit. Expect the administration to lean on Saudi Arabia and Gulf allies to increase output, release strategic petroleum reserves, and signal de-escalation to cap Brent below politically uncomfortable levels.
“Simultaneously, a weaker dollar would undermine the “America is strong” narrative, pushing the Fed toward a more hawkish-leaning posture, or at a minimum, constraining any dovish pivot. Watch for coordinated messaging between the White House and Treasury to reinforce dollar stability as a geopolitical signal,” said Nitant Darekar of Bonanza.
“While some countries may see temporary strategic advantages from a prolonged conflict, the broader global economy benefits far more from a quick de-escalation. The biggest risk for markets remains the disruption to energy supply routes, particularly the Strait of Hormuz, which plays a critical role in global oil trade,” Ponmudi R of Enrich Money said.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
