Summary: Analysts at Raymond James conclude the U.S. is "likely at this stage" to undertake a military operation in Iran, while emphasizing that the scope and aims of such an action remain unsettled. A marked increase in American military equipment in the Middle East, combined with stalled diplomatic talks, has amplified the chance of fresh strikes. Market participants are focused on possible interruptions to Middle Eastern oil flows and the consequences for inflation and central bank plans.
In a client note, Raymond James analysts Ellen Ehrnrooth and Ed Mills assessed that the Trump administration may prefer a "more targeted action, but practical realities keep the prospect of a wider engagement firmly on the table." Their view follows a swift buildup of U.S. military assets in the region and a deadlock after a meeting between U.S. and Iranian representatives earlier in the week.
The core demands from Washington remain unchanged: Iran should end its nuclear program, accept constraints on its ballistic-missile agenda, and curtail support for regional armed proxies. According to the analysts' summary of the situation, Tehran has so far declined those terms and provided only minimal concessions, while Iran continues to deny any attempt to construct a nuclear weapon.
U.S. President Donald Trump has signaled an imminent decision on the U.S. approach, saying he would decide within ten days and vowing to "make a deal or get a deal one way or the other" with Tehran. Iranian officials, for their part, have warned of a maximal response to any attack. Supreme Leader Ali Khamenei has been quoted as saying Iran could deliver a blow to the U.S. military that would be so hard "it cannot get up again."
Reflecting on the military movements, Raymond James noted: "While limiting factors remain [...], the sheer size of the military buildup suggests, at a bare minimum, a real willingness to follow through on the threats made over recent weeks." The analysts stopped short of defining precise objectives or timelines for any potential operation, underscoring the uncertainty that persists.
For markets, the immediate concern centers on oil. The possibility that U.S. strikes could follow last year's attacks on Iran's nuclear infrastructure has revived worries that key supplies from the Middle East might be disrupted. Iran is a major oil producer and wields influence over traffic through the Strait of Hormuz, a strategic chokepoint through which roughly a fifth of the world's oil supply transits.
Some market observers have suggested that strikes could push oil prices higher, which in turn might sustain upward pressure on inflation across multiple economies. Analysts at Capital Economics have warned that such a dynamic could force central banks to delay or scale back potential interest rate cuts.
On markets, Brent crude traded lower in mid-morning European trading on Friday but remained close to levels not seen since early August. Raymond James warned that while geopolitical market reactions have been muted in recent years, "the elevated uncertainty and risk that the operation spills into a wider conflict may test that dynamic."
The analysis from Raymond James frames a situation in which political and military signals point toward an increased chance of action, but significant ambiguity remains about execution and consequences. Financial markets and policymakers now face a set of risks tied to energy flows, inflation trajectories, and the possibility that military engagement could expand beyond limited objectives.
Key points
- Raymond James analysts describe a U.S. military operation in Iran as "likely at this stage," though the scope and goals are not defined.
- The U.S. has increased military equipment in the Middle East while diplomatic talks with Iran have stalled; Tehran has refused U.S. demands and offered minimal concessions.
- Markets are focused on potential disruptions to oil supplies through the Strait of Hormuz, with implications for global inflation and central bank policy.
Sectors affected: Energy and oil markets, inflation-sensitive consumer sectors, and fixed income/monetary policy-sensitive markets.
Risks and uncertainties
- Escalation risk - Military action could broaden into wider conflict, increasing geopolitical uncertainty and market volatility; energy markets would be particularly sensitive.
- Supply disruption - Any strikes that affect Iran or transit routes like the Strait of Hormuz risk constraining oil flows, which could push prices higher and affect inflation.
- Monetary policy impact - Sustained upward pressure on oil and inflation may force central banks to adjust the timing or magnitude of interest rate cuts, affecting bond markets and growth-sensitive sectors.
Notes: The article reports on the assessment and statements made by Raymond James analysts and public comments from U.S. and Iranian officials. The scale and exact objectives of any potential U.S. military operation remain unspecified in the available statements.