CITIC SEC: Key Signals and Potential Trends in the Iranian Situation

CITIC SEC released a research report stating that on February 28th local time, the situation in Iran entered a stage of military conflict eruption. As of 10:00 on March 1st Beijing time, the situation in Iran is still rapidly changing, making it difficult to speculate and deduce the final scenario in one go. Instead, it is more likely to continue fluctuating following key signals such as US military deployments, changes in Iranian politics, and the scope of conflict spills over. The potential changes in these three key signals will determine whether the global market impact will be a larger version of the "Twelve-Day War" in June 2025, or if it will move towards more extreme scenarios. To provide a reference for potential market impacts, CITIC SEC reviewed the market impacts of eight major conflicts in the Middle East since 1970, summarizing the following patterns: gold is a better safe haven asset compared to the US dollar, oil prices are still driven by supply and demand in the long term, the performance of US stocks is directly related to the extent of US military intervention and war situation trends, and Chinese assets are not significantly affected. The main points of CITIC SEC are as follows: Event Recap: On February 28th local time, Israel and the United States announced attacks on Iran. Several rounds of negotiations on the Iranian nuclear issue had not made substantial progress before this, and this event marked the final entry of Iran into the stage of military conflict eruption. Since 2026, the US and Iran have conducted three rounds of indirect negotiations through intermediaries such as Oman, revolving around the Iranian nuclear issue, weapon arrangements, and sanctions relief, but have not made substantial breakthroughs. According to Xinhua News Agency, on February 28th local time, Israeli Defense Minister Katz announced that Israel had launched a "preemptive strike" against Iran; US President Trump later announced that the US was conducting "large-scale sustained military operations" in Iran; at the same time, Iran's retaliatory actions were also continuing. Future Scenarios: As of 10:00 on March 1st Beijing time, the situation in Iran is still rapidly changing. The agency predicts that it will be difficult to speculate and deduce the final scenario in one go, so in the short term, more focus should be on three key signals and their potential changes, namely US military deployments, changes in Iranian politics, and the scope of conflict spills over. As of 10:00 on March 1st Beijing time, the agency believes that the severity of the situation has exceeded that of the "Twelve-Day War" in June 2025. It may be difficult to speculate and deduce the final scenario in one go. It is more likely to follow key signals and continue to fluctuate. The agency believes that the following three key signals need to be monitored. Signal one: Whether the US military will further increase the scale of military deployments on the existing basis, which will determine the duration of the conflict. The Center for Strategic and International Studies (CSIS) of the United States on February 27, 2026, statistics show that the current US military force deployment around Iran is comparable in scale to the US "Desert Fox" operation against Iraq in 1998, the support for air strikes is limited in duration, especially not enough to support large-scale ground operations against Iran by the US. During the "Desert Fox" operation, the US launched four rounds of air strikes, which lasted about 70 hours in total and did not involve ground combat. Signal two: Whether the internal political situation in Iran is stable, which will determine the extent of conflict spreading. According to Xinhua News Agency, on February 28th local time, Trump posted on the social media platform Truth Social, announcing that Iran's Supreme Leader Khamenei "has died." It is necessary to closely monitor the development of the situation to see if it leads to changes in the conflict or diplomatic situation. Signal three: Whether Iran's retaliatory measures are substantively related to key oil production facilities and shipping routes, which will determine the depth of market impact. According to Xinhua News Agency on February 28, oil tanker transport in the Strait of Hormuz has been stalled, with several large oil companies and energy traders globally urgently issuing instructions to suspend all oil and fuel vessels passing through the Strait of Hormuz to avoid the safety risks brought by the escalation of the conflict. It is necessary to monitor whether related threats will actually materialize. In conclusion, if the above three signals do not undergo significant changes, the market impact may be seen as an amplified version of the "Twelve-Day War" in June 2025; however, it is important to pay attention to whether potential changes in the above signals will lead to more extreme scenarios. Historical Reference: To provide a reference for potential market impacts, the agency reviewed the market impacts of eight major conflicts in the Middle East since 1970, summarizing the following patterns: gold is a better safe haven asset compared to the US dollar, oil prices are still driven by supply and demand in the long term, the performance of US stocks is directly related to the extent of US military intervention and war situation trends, and Chinese assets are not significantly affected. The agency reviewed the price trends of various assets at the beginning of the eight major conflicts in the Middle East since 1970 (the Fourth Middle East War, Iran-Iraq War, Fifth Middle East War, Gulf War, Afghanistan War, Iraq War, Syrian Civil War, Israel-Palestine Conflict). From a historical perspective, in terms of safe haven assets, the price of gold is more significantly affected by Middle East wars compared to the US dollar. The agency judges that geopolitical factors have a temporary catalytic effect on gold, concentrated in the first 10 days of war outbreak, with key influences on price reactions depending on whether there were expectations before the war. In terms of energy, all three oil crises in history were triggered by Middle East wars, but due to changes in the global supply landscape, the long-term impact of Middle East wars on global oil prices is gradually diminishing. In previous studies, the agency found that according to historical patterns, if a war causes oil prices to rise by more than 50% above pre-war levels, it may trigger an economic recession in the United States. Regarding US stocks, historically, if the US is not directly involved in the war, emotional disturbances to US stocks are usually repaired within about a week of the outbreak of war; if the US is involved, emotional repair of US stocks depends on the clarity of the war situation. In terms of Chinese assets, as Middle East wars lack a clear transmission mechanism, emotional disturbances on the day of the outbreak of war historically tend to be mostly restored by the second day.