Financial markets are closing their doors this Saturday evening, from New York (5:39 PM local) to Tokyo (7:39 AM Sunday morning), but traders will sleep poorly. Because while Sir Lawrence Freedman, emeritus professor of war studies at King's College London, was explaining to Bloomberg this week the "uncertain consequences" of U.S. military strikes on Iran, oil prices have already begun pricing in geopolitical risk.
"You trigger things but you cannot control how they end," Freedman declared. This phrase should be engraved on the Pentagon's facade, so perfectly does it summarize twenty years of disastrous American military interventions. But apparently, Washington never learns.
Iran is not Iraq
Read more: breaking analysis romaniasThe fundamental difference that American hawks seem to ignore is that Iran possesses economic disruption capabilities that neither Saddam Hussein's Iraq nor the Taliban's Afghanistan had. Read more: breaking analysis europes Tehran controls the Strait of Hormuz, through which 21% of global oil transits. A closure, even temporary, of this strategic passage would explode energy prices and plunge the world economy into immediate recession.
Goldman Sachs analysts estimate that open conflict with Iran could send Brent crude soaring to $150 per barrel, more than double its current level. For an American economy already struggling to contain inflation, this would be a devastating blow. But apparently, this elementary economic reality escapes Washington's strategists.
The syndrome of military hubris
What's striking in the statements reported by Bloomberg is this same arrogance that presided over interventions in Iraq (2003) and Libya (2011). American military planners still believe they can "surgically" strike an adversary without triggering uncontrollable escalation. Recent history proves the opposite.
Iraq was supposed to be "liberated" in a few weeks: twenty years later, the country remains unstable and Iranian influence there is stronger than ever. Libya was supposed to experience a "democratic transition" after Gaddafi's fall: it has been sinking into chaos ever since. But the lessons of these failures seem never to have reached Pentagon offices.
Markets are already anticipating chaos
While politicians play strategist, financial markets coldly calculate risks. Since Asian markets opened last Monday, oil stocks have risen 8%, maritime insurance companies 12%, and gold prices have reached new highs.
This nervousness is not irrational. Iran possesses formidable asymmetric military capabilities: ballistic missiles, drones, regional proxies (Hezbollah, Houthis, Iraqi militias). An American strike would probably trigger cascading retaliation against Washington's regional allies, durably disrupting energy supply chains.
The global economy held hostage
What makes this potential escalation particularly dangerous is the timing. The global economy is barely emerging from the post-Covid inflationary crisis. Central banks, from the Fed to the ECB, maintain high interest rates to contain prices. A major oil shock would reignite inflation and force these same central banks to choose between recession and price spirals.
JPMorgan economists estimate that conflict with Iran would cost the American economy between 2 and 3 GDP points in the first year. For Europe, already weakened by the war in Ukraine, this would be potentially catastrophic. But these economic considerations seem secondary to Washington's geopolitical calculations.
The illusion of control
Most troubling in this affair is this persistent American illusion of "controlling" military operations. As Sir Lawrence Freedman, recognized expert on modern conflicts, rightly emphasizes, "you trigger things but you cannot control how they end."
This truth is disturbing because it challenges the dominant narrative in Washington: that of an America capable of "managing" crises through force. The reality is more prosaic: every American military intervention since 2001 has produced unforeseen consequences, often worse than the initial problem.
The price of adventurism
As European markets reopen Monday morning (9:00 AM in Paris and Frankfurt, 8:00 AM in London), followed by Wall Street (9:30 AM in New York), investors will scrutinize every statement from Washington. Because unlike politicians, financial markets cannot afford adventurism: they pay cash for every geopolitical miscalculation.
Iran knows this and plays on it. Tehran doesn't need to win militarily against the United States: it just needs to make the economic cost of conflict unbearable for the West. In this war of nerves, Washington's sorcerer's apprentices start with a major handicap: they still believe they control a world that has long escaped them.
The question is no longer whether Washington will strike Iran, but whether American leaders will measure the economic consequences of their adventurism before it's too late. The markets have already given their answer.