US Warns Iraq of Possible Large-Scale Military Strike on Iran

The United States has notified Baghdad that it may launch a significant military operation targeting the interior of Iran, which could include a large-scale strike. Washington informed Iraqi officials that any interference or retaliatory actions by Iraqi factions in response to such an attack would lead to consequences.

The warning comes as the U.S. demands that Iraq shut all but two of its border crossings shared with Iran, a request backed by reported threats of sanctions if Baghdad fails to comply. In a phone call with President Donald Trump, Iraqi Prime Minister Ali Faleh al-Zaidi emphasized that Iraq’s territory must not be used to launch attacks on neighboring nations. Foreign Minister Fuad Hussein told Al Jazeera that the current regional conditions suggest the possibility of a renewed war in the Middle East.

How we got here

U.S.-Iran war, oil blockade and peace diplomacy

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How it could play out

−8.0%Impact on the S&P 500 across 3 scenarios (−12.8% to +4.3%)

Scenarios

Each figure is the modeled move of the S&P 500 if the outcome occurs. For information only. Not investment advice.

How it could play out

Scenarios

Story, how it could play out

3 ways this could read

Possible futures, not reported news · chances and moves from Tilt’s model

−7.5%
Strait of Hormuz intermittent restricted throughput
Restricted Hormuz throughput creates a stagflation shock: the broad equity market falls 7%, erasing $6.72T over 20 days as energy, freight and financing costs rise while growth weakens. Energy gains 3.7%, but Consumer Cyclicals lose 9.5% and Technology loses 8.8%, because producers benefit from scarcity while energy users and growth-sensitive assets absorb higher costs and lower valuations.
Consumer Cyclicals −9.5% · Technology −8.8% · Industrials −7.8%
−12.8%
Strait of Hormuz commercial energy transit cessation
A near-total halt in Strait of Hormuz energy traffic produces a stagflationary shock: the broad equity market falls 12%, erasing $11.5 trillion over 20 days. Expensive energy, freight and financing punish technology and consumer-sensitive businesses, while energy gains 5.3% as higher oil and LNG realizations outweigh the wider selloff.
+4.3%
Sustained Strait of Hormuz commercial-transit normalization without political settlement
Sustained Hormuz transit normalization lifts the broad equity market 4%, adding $3.84T as cheaper energy, shipping and credit support risk appetite. Energy loses pricing support, while technology and fuel-importing utilities benefit from lower costs and easier financial conditions.
Consumer Cyclicals +5.3% · Technology +5.2% · Non-Energy Materials +4.4%

Each figure is the modeled move of the S&P 500 if it happens. For information only. Not investment advice.

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Strait of Hormuz intermittent restricted throughput

Strait of Hormuz commercial energy transit cessation

Sustained Strait of Hormuz commercial-transit normalization without political settlement