Oil tankers drift through one of the most strategically sensitive chokepoints on Earth.
Political rhetoric escalates.
Two nations, one a superpower, the other a regional force with nuclear ambition, stare at each other across the Persian Gulf.
This is not a Hollywood script.
This is the Strait of Hormuz.
History teaches us that the most dangerous conflicts do not begin with explosions.
They begin with pride.
They begin with miscalculation.
They begin with a refusal to blink.
Are we witnessing the world’s most dangerous game of chicken?
Strip away the emotion.
The Strait of Hormuz carries roughly 20% of global oil supply.
Every day, millions of barrels transit through waters narrow enough to be disrupted by a handful of fast boats, mines, or missiles.
For the United States, the issue is not simply Iran.
It is:
For Iran, the stakes are existential:
Neither side can afford to look weak.
That is what makes brinkmanship dangerous.
This is not 2003.
Global debt levels are significantly higher.
Inflation remains embedded.
Energy markets are tight.
Supply chains are fragile.
A disruption in Hormuz today would not simply be a military event.
It would be an inflation event.
A bond market event.
A currency event.
And markets currently appear calm.
That calm may reflect confidence.
Or complacency.
A “game of chicken” works like this:
Two drivers speed toward each other.
The one who swerves first loses face.
If neither swerves, both crash.
In geopolitical terms:
The danger is not necessarily intentional war.
The danger is accident.
History is full of conflicts that no one “wanted” but no one stopped.
There are broadly four scenarios:
Each carries different market implications.
This is where emotion must give way to analysis.
Markets tend to price:
Even if the probability of escalation is low, the consequences are extremely high.
When consequence risk rises faster than markets adjust, volatility follows.
This does not guarantee crisis.
But it increases fragility.
It is entirely possible that this ends in negotiation.
It is entirely possible that cooler heads prevail.
But history suggests that when:
Stability becomes conditional.
This is not about predicting war.
It is about recognising risk.
When global powers edge toward confrontation in a system already burdened by debt and inflation, prudence becomes more valuable than optimism.
The question is not whether a crash is imminent.
The question is whether markets are pricing the full spectrum of outcomes.
And that is where thoughtful capital allocation begins.