Possible scenario
Regional Escalation
23% Chance
The battle for the strait widens into a larger regional confrontation involving Saudi Arabia, the UAE, U.S. naval forces, or Iranian-linked assets. This has a lower probability than stalemate but carries the largest market impact because Bab al-Mandeb is a key oil, LNG, and container chokepoint.
Initial impacts
- Riskier companies' borrowing costs Up
- Market volatility Up
- 10-year Treasury yield Down
- Oil prices Up
- US dollar Up
Secondary impacts
- Energy +3.6%
Portfolio impact
S&P 500-2.5%
Each figure is the modeled move of the S&P 500 if the outcome occurs. For information only. Not investment advice.
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