Bank of America said on Monday that a major military campaign by the United States and Israel against Iran is not expected, at present, to inflict severe damage on Japanese stock prices, though it cautioned that the situation remains highly fluid.
The firm’s global commodity research group set out a base-case scenario that mirrors developments seen in June 2025: Iran’s newly installed leaders choose a pragmatic course and limit retaliatory measures. Under that pathway, Brent crude could spike above $80 per barrel on a temporary basis before easing back into a $60-70 per barrel range as tensions cool.
Bank of America also flagged a higher-risk scenario in which Iran’s government remains hardline. In that circumstance, the firm sees potential for Brent crude to climb above $100 per barrel, a move that would represent a more significant shock to markets.
The bank emphasized structural reasons why a conflict centered in the Middle East may have only a muted immediate effect on global markets. It noted that the Middle Eastern economy is relatively small and geographically removed from the world’s major economies, and that past episodes have tended to exert material influence on the global economy primarily when oil prices spike significantly.
Another cornerstone of the bank’s view is the greater resilience of the global oil supply since the expansion of U.S. shale oil and gas production. That extra supply capacity, Bank of America argues, reduces the global economy’s sensitivity to price swings stemming from geopolitical developments in the region.
Japan’s domestic preparedness was also highlighted. According to the Agency for Natural Resources and Energy, Japan maintained an oil stockpile equivalent to 146 days as of December 2025. Bank of America said that even if Iran were to close the Strait of Hormuz, such a move would be unlikely to trigger an immediate and drastic effect on Japan, given that stockpile cushion.
Bank of America further suggested that full-scale involvement by the United States in military operations could make it difficult for a new Iranian government to sustain a long-term hardline posture. The bank noted that the Strait of Hormuz is Iran’s principal route for oil exports and that a protracted blockade would inflict significant damage on Iran’s own export revenues and diplomatic standing.
Overall, the bank’s analysis frames the near-term market impact as limited under its central forecast, while explicitly acknowledging scenarios that could produce more acute oil-price and economic consequences should Iran take a sustained hostile stance.