| Scenario | Likelihood | Description | Oil price (Brent) | Macro & policy | Financial market impacts |
|---|---|---|---|---|---|
| Upside: Imminent ceasefire (>4 weeks) | Medium | U.S. & Israel cease all military operations; Middle East security structurally better | Price retreats below $70 | Limited impacts to global growth; any inflation proves transient; no major policy changes | Risk appetite recovers quickly; the most impacted markets (Europe & Asia) rebound; status quo for rates and credit spreads |
| Moderate: Gradual end to conflict | Medium | Major military operations wind down; limited strikes may continue | Oil stays in the $75-85 range | Moderate impact to global growth and inflation, monetary policy easing possible; little change to U.S. growth, inflation, and monetary policy | Weakness in international markets lingers (EU and Asia most sensitive) but no major correction; U.S. outperformance holds |
| Downside: Prolonged conflict(>3 months) | Low | Military operations continue; Iranian regime proves resilient | Price exceeds $100 and remains high | EU and Asia recession; U.S. economy weakens sharply on tighter financial conditions; broad fiscal and monetary policy toolkits utilized | Equities correct sharply on recession risk, credit spreads widen; perceived safe havens like gold, the U.S. dollar, defensive sectors, outperform; bond performance mixed due to stagflation |
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Disclosure
Source: Schwab Center for Financial Research, as of 3/4/2026. For illustrative purposes only.