Four-Stage Simulation of the Iran War: The 6-Week Mark Is the Turning Point; July Is the Real Buying Opportunity
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Four-Stage Simulation of the Iran War: The 6-Week Mark Is the Turning Point; July Is the Real Buying Opportunity
The Federal Reserve will be forced to cut interest rates in September.
Navigating Web3 tides with focused insightsAuthor: Radigan Carter
Translation & Editing: TechFlow
TechFlow Intro: The very context in which this analysis was written says it all—the author drafted this four-stage market framework while evacuating his family from Oman and responding to missile attacks.
He makes no attempt to forecast outcomes. Instead, he maps out the most plausible middle path: six weeks is the critical inflection point for inflation transmission; July–August presents a buying window; and by September, the Fed will be forced to cut rates.
This is among the highest-information-density and most credible market analyses of the Iran war published to date.
Full Text Below:
Over the past week, I completed this analysis in fragmented bursts—while evacuating my wife and responding to attacks in Oman. It reflects my current thinking on how this war will impact markets over the next 6 to 12 months. I am not making predictions. Rather, I aim to outline the most probable middle path, so I can adapt as events unfold.
My goal has always been Thucydidean: assume my own risks, pursue understanding, and speak truth clearly. When immense forces collide head-on once again—and we all feel the weight of uncertainty—my sole focus is: what should I, as an individual investor, do to protect my family?
I see four phases ahead.
Phase One
Denial. This is where we are now. We’re seeing volatility tied to presidential statements—markets move at open based solely on whatever he says. Everyone is desperately trying to believe this new Middle East war will be brief. Powell has already assured everyone this isn’t stagflation—even as he watches Israel bomb the South Pars gas field, practically ready to hurl his phone across the room.
Phase Two
If the war persists, this phase begins at the six-week trigger point in mid-April. By Week Six, the oil-price shock triggered by attacks on energy infrastructure will have seeped into freight, food, and consumer goods. CPI data starts triggering alarm. Tech stocks begin suffering real pain, as valuation multiples contract.
Tech valuations should fall—higher energy prices drive hotter CPI prints, killing any lingering hope of Fed rate cuts. Powell has already begun crushing those hopes; April and May data will finish the job. This dynamic won’t change as long as Israel holds veto power over our foreign policy. Israel bombs South Pars, while the U.S. permits Russia and Iran to sell oil globally in an effort to stabilize energy prices.
When Powell fully extinguishes the last hope of a 2024 rate cut, markets will erupt in fury. And unlike every selloff over the past 15 years, I’m uncertain whether I can simply “buy the dip” and wait for the Fed to lift me back up. What we’ll face is supply-driven inflation—born from bombed gas fields and LNG terminals.
The Fed has a room full of useless PhD economists and a computer that prints money. It does not have a team of petroleum engineers—or LNG processing facilities in its basement. Monetary policy cannot solve this problem. Consequently, tech valuations priced on rate-cut expectations will be repriced to reflect rates holding steady. Once investors realize there’s no easy way out, everyone will suffer before summer arrives.
Phase Three
As summer approaches—targeting July to August—corporations report earnings, and the destruction we’ve witnessed on the ground begins appearing in hard numbers. Earnings disappoint. Unemployment rises. Against this war backdrop, AI-driven labor displacement accelerates behind the scenes, as companies slash costs to cope with higher energy inputs. Politicians panic ahead of the November midterm elections.
Phase Three is the buying opportunity I anticipate.
High-quality names on my shopping list will likely appear at meaningful discounts—by then, everyone will be exhausted, furious about rising costs and eroding job security, and demanding action ahead of autumn and the midterms. This will happen. We’ve moved from cost-cutting to the kind of flood-the-zone spending seen during the Afghanistan War. The war has lasted less than three weeks, yet costs have skyrocketed—with no sign of slowing. Thousands of billions are just the beginning. The Fed will eventually capitulate; politicians will ramp up fiscal support; and we’ll add over $1 trillion more in debt to fund Israel’s war. Patience is all that’s required.
Phase Four
End of 2026 through 2027. The Fed capitulates and begins cutting rates; everything bought in Phase Three starts paying off. I expect a heightened, bipartisan focus on energy independence and energy abundance emerging from this crisis. Both parties in Congress will sing from the same hymn sheet. No one wants to be labeled “obstructing relief from such suffering,” having witnessed firsthand how disruption in one region’s energy markets drives up costs everywhere. And this gives them both the rationale and political cover to cut rates, increase spending, and create jobs.
The Iran war will underscore the necessity of controlling input factors—and I expect this to benefit assets under U.S. jurisdiction, or at least within the Western Hemisphere. Against this backdrop, AI will only accelerate. Companies facing margin pressure and rising energy/input costs will deploy AI aggressively to cut labor expenses—not just typical AI or tech firms, but across industries. Productivity gains will show up in their margins from 2027 onward. Emerging from this war, the AI story won’t just be about builders of AI—it’ll be about adopters using AI to survive. This is the structural shift I’ll seek this summer.
How This War Began
The war is nearing three weeks old, and I still believe most people underestimate its likely duration. This isn’t because I’m forecasting worst-case scenarios—I’m deliberately focusing on the most probable middle path—but because the theological framework guiding Iranian decision-making doesn’t respond to the incentives Western politicians and commentators assume.
Shi’a tradition is rooted in the story of Hussein ibn Ali, the third Shi’a Imam, who knowingly marched to his death at the Battle of Karbala in 680 CE. With just 72 companions, he faced thousands of enemy troops—and went anyway. In Shi’a theology, resisting injustice is a duty—even when victory is conventionally impossible. Failure and death are not failure; compromise in the face of overwhelming injustice is.
The way Israel and the U.S. launched this war reads like a deliberate reenactment of Shi’a Islam’s origin story itself—diplomacy treated as deception, launching attacks the moment Oman’s foreign minister announced a diplomatic breakthrough, assassinating Khamenei and his family. Just as Hussein was massacred after being promised safe passage.
That’s why Iran won’t kneel—no matter how many targeted killings Israel carries out, even against men at home with families and civilians. Israelis know this. They don’t care. Israel will bomb Tehran until it resembles Gaza, igniting the entire Middle East. It is indifferent to chaos. And the U.S.? I know I’m not.
Shi’a theology reframes suffering as confirmation of walking the righteous path. This traces back to the 7th century, when Arab tribes surged out of the Arabian Peninsula to conquer parts of the Roman and Persian empires. Persians—a civilization millennia old—saw Arab conquest as unjust, so Shi’a theology found natural resonance within Persian identity.
The notion that Israel and the U.S. can assassinate Iranian leaders, lob a few missiles, and expect submission to foreign powers—despite a history built precisely on millennia of resistance to foreign domination—is absurd. We remain tragically ignorant about the adversary we chose to fight, learning nothing from the failures of the Global War on Terror or the Ukraine war—yet handing foreign policy veto power to psychopaths.
Current Situation
It is Day 20. The conflict has already crossed the threshold into Phase Two: energy-cost penetration into supply chains.
Yesterday, Israel struck Iran’s South Pars gas field—the world’s largest. Iran retaliated, severely damaging Qatar’s Ras Laffan LNG facility—the world’s largest. QatarEnergy has declared force majeure on LNG exports and shut down liquefaction production. Qatar accounts for roughly 20% of global LNG trade, with over 80% of its cargoes bound for Japan, South Korea, China, and Taiwan. These supplies are now offline—and restoration may take years. Israel’s Bazan refinery in Haifa—which supplies 65% of Israel’s diesel and 59% of its gasoline—was also hit, along with other Gulf energy infrastructure.
Regarding Qatar, I worked in Ras Laffan Industrial City for five years, commissioning LNG facilities. QatarEnergy (then QatarGas) is vertically integrated: owning offshore gas fields, LNG processing facilities, export terminals, and its own LNG tanker fleet.
These LNG processing facilities are colossal. When built two decades ago, 250,000 workers reported daily to that industrial city in sweltering heat—construction sites resembled forests of cranes. Bringing these facilities online—or repairing, inspecting, and systematically restarting them post-damage—is not a rapid process. These plants function like small cities, costing tens of billions, with intricate systems and custom components whose lead times span years.
Once missiles and Shahed-136 suicide drones strike these facilities, causing primary and secondary fragmentation damage—plus fire and blast-wave impacts—you must meticulously inspect every system before phased restart. Certain systems operate under extreme pressure; missing even one damaged component could trigger catastrophic failure.
If long-lead, custom components are destroyed, you’ll wait months—or longer—for replacements manufactured in China or South Korea, shipped, offloaded at port, and escorted into place by Mammoet heavy-lift teams.
I’d hoped Ras Laffan’s damage would prove less severe—repairable in months, not years. Unfortunately, that appears unlikely.
This triggers immediate ripple effects across other sectors. Qatar’s offshore gas is highly sulfurous. QatarEnergy extracts liquid sulfur from the gas stream—producing sulfur pellets shipped via bulk carriers for fertilizer, chemical, cement, and refining applications. Once LNG goes offline, cascading secondary and tertiary effects begin. I’m not yet certain of their full scope—but one thing is certain: if this persists long enough, the global economy will begin failing in unexpected ways.
As Charles Gave says, the economy is energy conversion. As energy sources the world depends on go offline—and stay offline—nations will scramble for alternative imports. With Middle Eastern producers offline, global energy prices rise. That may benefit U.S. energy exporters—but over time, higher energy costs pass to consumers, forcing energy-intensive businesses to shutter capacity and lay off workers.
Chart: Toward Inflationary Collapse
Hormuz Crisis
Beyond energy infrastructure, the conflict continues spreading regionally. Israel is invading southern Lebanon, killing ~1,000 and displacing nearly one million. Iraq’s Popular Mobilization Forces—the Iran-backed Shi’a militia that played a pivotal role fighting ISIS in 2016—are now engaged, attacking U.S. facilities in Iraq, Saudi Arabia, Kuwait, and Jordan. This forces the U.S. to withdraw and redeploy personnel from the region—further degrading U.S. military capacity to sustain regional operations.
I’ve transited the Strait of Hormuz by ship multiple times—and previously wrote an article about it.
Since the war began, over 20 vessels have been struck. The Islamic Revolutionary Guard Corps (IRGC) has launched 50 operations against U.S. bases in the region. My assessment: from Adana in southern Turkey, south through Israel, eastward across Lebanon, Syria, Iraq, the Arabian Peninsula, the Persian Gulf, and the Arabian Sea—the entire region now falls under Iranian fire control.
Add Yemen’s Houthis into the mix, and once they begin striking Red Sea shipping, global maritime and energy trade fractures in two. Historical parallels include: the Ottoman Empire closing the Silk Road; the economic shock of WWI’s outbreak in summer 1914; and the 1956 Suez Crisis revealing Britain’s imperial decline. That’s why I believe investors, exiting this crisis in Phase Four, will reassess portfolios—and seriously consider the questions this war reveals. Many may say: “Profits look fine—but is the asset secure? Under which jurisdiction does it reside?” Assets located in jurisdictions perceived as safer—requiring no transit through perilous chokepoints to reach end markets—may command premiums. The stakes of this conflict are enormous.
Climbing the Escalation Ladder
Some ask: If Iran controls the Strait of Hormuz, why doesn’t the U.S. begin striking life-support infrastructure? After targeted killings, regional spillover, and direct strikes on energy producers, further escalation—no matter how White House interns package this war as a video game and release despicable propaganda videos—is not something to treat lightly.
Unfortunately, we’re already striking life-support infrastructure. On Day 7 of the conflict, the U.S. hit a seawater desalination plant on Iran’s Qeshm Island—the strategic guardian of the Strait of Hormuz. Iran’s geology provides abundant natural caves on the island, and the IRGC has spent decades improving and hardening underground facilities there.
The next day, Iran retaliated with equal escalation—deploying attack drones to strike a desalination plant in Bahrain. Kuwait and the UAE have also reported missile-related damage to desalination plants. Losing desalination capacity poses an existential threat to Gulf states and Israel. With summer temperatures hitting 46°C, disruptions to drinking water and electricity risk triggering humanitarian crises—and deaths—this is a tangible danger.
Over 90% of Gulf desalinated water comes from just 56 plants. In Kuwait and Bahrain, desalination accounts for ~90% of national water supply. In Oman—where I reside—it’s 86%; in Israel, 80%; in Saudi Arabia, 70%; and in the UAE, 42%.
If the U.S. and Israel continue striking life-support infrastructure, Iran will retaliate. As air defenses degrade, such strikes grow easier—and this asymmetry represents the Gulf states’ and Israel’s key vulnerability. Roughly 64 million people across the region could be affected. This would spark a humanitarian and refugee crisis dwarfing Syria’s civil war—with profound implications for Europe and Turkey.
Oil built the modern Middle East—but desalination keeps it alive. In this war, Iran holds escalation dominance on both fronts. The U.S. needs oil to flow continuously from the Gulf to stabilize global markets—and the region cannot afford to lose desalination plants. Israel may keep climbing the escalation ladder—but eventually hits the top rung, at which point Iran will strike its desalination plants.
Phase Two: The Logic of the Six-Week Trigger
Everything that’s happened so far belongs to Phase One—where we are now, why neither side can retreat, and why the conflict will likely persist. But Trump could tomorrow declare a glorious victory on Truth Social, ending the war with a brilliant deal—even if it’s entirely fictional.
Whether the Strait of Hormuz remains under Iranian control doesn’t matter; nor does the U.S. experiencing its own Suez Moment—those have longer-term implications, but that’s another discussion. What matters here is whether higher energy costs have yet to permeate supply chains—if so, this entire analysis becomes obsolete.
As I reflected, I asked myself: At what point do higher energy prices become irreversibly embedded in the system—regardless of announcements or agreements?
Six weeks—that’s my trigger point. By Week Six, denial ends. Nothing is okay anymore. This war isn’t a 20-minute adventure. April and May inflation data will reflect the substantive damage already inflicted.
Chart: Every Neoconservative Is Talking About the Middle East
Here’s how I arrived at the six-week trigger:
Weeks 1–2: Refined product prices adjust—we’ve already seen this. Gasoline and diesel at pumps get repriced. More fragile nations begin facing shortages. Oil is up ~40% from pre-war levels.
Weeks 3–4: Where we are now. Freight and logistics costs adjust as carriers reprice based on new fuel costs. February’s PPI came in at 0.7%, versus 0.3% expected—a leading-edge signal of this phase. April inflation data will look worse as costs continue penetrating the system.
Weeks 5–8: Freight and logistics cost increases from Weeks 3–4 flow into consumer goods, as costs are passed on. Food, building materials, and finished goods all get repriced—because last month’s fuel and freight inflation has now reached consumers.
By Week Six, higher costs have already reached consumers—irrespective of whether the conflict stops. Higher prices are locked in, especially given offline energy producers—leaving only patience before Phases Three and Four unfold this summer and fall.
Prior to six weeks, a ceasefire could reverse much of the damage—contracts haven’t fully rolled over, businesses can revert to prior pricing, and the Fed could cut rates. Everything would be fine—at least theoretically. Though with energy infrastructure damaged and Qatari gas offline for the foreseeable future, my judgment here may be flawed.
After six weeks, even a ceasefire cannot undo what’s already in the pipeline. Repricing has occurred; May and June CPI data will reflect the damage—regardless of developments in Iran.
CPI data will compel Powell—who currently claims he’s unconcerned about stagflation—to extinguish the final vestiges of 2024 rate-cut hopes, holding rates steady. This will compress tech profit margins—and markets won’t be pleased. As the war drags on, nobody wins.
Phase Three: The Long Summer and AI
My plan this summer is to hit the beach and the gym—staying patient—then seriously assess where things stand by late summer. By August, corporate earnings should begin reporting the damage we’re witnessing on the ground. Meanwhile, AI accelerates behind the scenes, as companies slash costs under pressure from higher energy inputs.
Companies have been deploying AI instead of hiring—and now we layer on a stagflationary energy shock. You don’t need to be a rocket scientist to realize: when a company faces margin compression from $95 oil and must cut costs, it will deploy AI tools to replace staff wherever possible. This isn’t about innovation—it’s about survival.
AI adoption will accelerate during downturns, as it becomes the obvious cost-cutting lever.
The cruel paradox: this works brilliantly for individual firms—while simultaneously destroying aggregate demand. It eliminates income that workers would otherwise spend—and I’m uncertain what this means for creditors who previously considered their holdings “gold-plated.”
It’s also unclear what it means for colleagues—whose outlooks grow uncertain, prompting cuts to discretionary spending—especially amid rising commodity costs driven by energy inputs.
So if we see price hikes from the energy shock—paired with unemployment deteriorating faster than any historical model predicts—because AI-driven replacement is compounding and amplifying cyclical downturns—I won’t be surprised.
This is the most crucial timing insight I offer.
The Fed’s employment mandate will trigger far earlier than anyone expects—not just due to the war, but because AI structurally amplifies hidden unemployment. This compresses the entire timeline—pointing toward a September rate cut.
The Fed will face a dilemma: inflation it cannot fight, and employment deteriorating rapidly. It will hold steady all summer—then cut rates in September under midterm election pressure.
AI and tech stock prices will fall in this environment, pressured by multiple compression and slowing revenue. Yet the narrative will strengthen. Companies adopting AI will be the ones surviving the downturn; those that didn’t will be the ones collapsing. So when stocks are cheapest, the long-term thesis becomes most compelling. That’s why I want to stay patient—and buy tech and research firms leveraging AI to emerge from crisis during Phase Three.
Looking back after Phase Four, people will say: “Of course I should’ve bought that copper miner—it was crushed, because no sulfur flowed from Hormuz—but they turned 30-ton haul trucks autonomous, and now Congress is printing money because both parties believe in energy independence!”
Midterm Elections
The Fed, the White House, and Congress each hold distinct mandates—but share one deadline: November. No incumbent wants to face voters amid stagflation without policy response. No Fed chair wants to be seen sitting idle as the economy deteriorates.
This alignment breaks the deadlock. The Fed will signal at Jackson Hole in August—and cut rates in September—allowing every politician to campaign on “We took action.”
Markets will front-run this by 4–6 weeks—meaning July–August is when I’ll seriously consider initiating positions—if the six-week trigger activates and the war persists. And AI-driven employment deterioration actually helps this timeline. It gives the Fed political cover to cut rates despite ongoing inflation pressure—framing it as an employment emergency, not policy surrender.
Outlook for 2027
The energy independence theme emerging from this crisis will be massive—and bipartisan—like defense spending during the Global War on Terror, but focused on energy. Once higher energy prices and related cost shocks hit consumers, energy independence will dominate the political narrative—transcending party lines in 2026–2027.
The mutual bombing of South Pars, Qatar’s LNG terminals, and Saudi refineries lays bare this vulnerability. Every politician campaigns on “Never again dependent on the Middle East.” Both parties in Congress will compete for more infrastructure spending—and expanded drilling, permitting reform, nuclear, and clean energy.
The single most important thing I remind myself: I’m not trying to predict—I’m adapting. If a genuine peace agreement emerges—not Trump tweeting an end, but actual cessation of hostilities, reopening of Hormuz, re-engagement of insurance markets, and an Iranian negotiating partner capable of enforcing compliance—I’ll pivot.
But frankly, with Larijani killed and Israel continuing to eliminate every potential interlocutor, that hope fades daily.
This is my current framework—not a prediction, but an adaptable structure to evolve as events unfold.
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