CITIC Securities: Key Signals and Potential Trends in the Iran Situation

CITIC Securities APP has learned that CITIC Securities released a research report stating that on February 28 (local time), the situation in Iran entered a phase of military conflict. As of 10:00 Beijing time on March 1, the Iran situation is still changing rapidly. It is difficult to predict and interpret based on a single final scenario, and it is more likely to fluctuate continuously following key signals. Whether there are potential changes in three critical signals—U.S. military movements, Iran’s political developments, and the scope of conflict spillover—will determine whether the global market impact will be an amplified version of the “Twelve-Day War” in June 2025 or escalate into a more extreme scenario. To provide a reference for potential market impacts, CITIC Securities reviewed the market effects of eight major conflicts in the Middle East since 1970 and summarized the following patterns: safe-haven assets like gold outperform the dollar, oil prices remain long-term supply and demand driven, U.S. stock performance is directly related to the level of U.S. military intervention and battlefield developments, and there is no significant impact on Chinese assets.

CITIC Securities’s main points are as follows:

Event overview: On February 28 (local time), Israel and the U.S. announced attacks on Iran. Prior rounds of Iran nuclear negotiations had not achieved substantive breakthroughs. This event marks the final entry of the Iran situation into a phase of military conflict.

Since 2026, the U.S. and Iran have conducted three rounds of indirect negotiations through intermediaries such as Oman, mainly focusing on Iran’s nuclear issues, weapons arrangements, and sanctions relief, but without substantive breakthroughs. According to Xinhua News Agency, on February 28 (local time), Israeli Defense Minister Gantz announced a “preemptive strike” against Iran; U.S. President Trump later stated that the U.S. is conducting a “large-scale, sustained military operation” in Iran; meanwhile, Iran’s retaliatory responses continue.

Follow-up analysis: As of 10:00 Beijing time on March 1, the situation in Iran remains rapidly evolving. The bank expects it to be difficult to predict and interpret based on a single final scenario. In the short term, focus should be on three key signals and their potential changes: U.S. military movements, Iran’s political developments, and the scope of conflict spillover.

As of 10:00 Beijing time on March 1, the bank believes the severity of the situation has exceeded that of the “Twelve-Day War” in June 2025. It is more likely that the market will fluctuate with key signals rather than being able to predict a final scenario. The bank suggests paying attention to the following three important signals.

Signal 1: Whether the U.S. further escalates military deployment beyond current levels, which will determine the duration of the conflict.
According to data from the Center for Strategic and International Studies (CSIS) on February 27, 2026, the current U.S. military deployment around Iran is comparable to the scale during the 1998 U.S. “Desert Fox” operation against Iraq. The support for air strikes is limited in duration, especially insufficient to support large-scale ground operations against Iran. Historically, during “Desert Fox,” the U.S. launched four rounds of airstrikes over about 70 hours, without involving ground combat.

Signal 2: Whether Iran’s internal political situation remains stable, which will influence the extent of conflict spread.
According to Xinhua News Agency, on February 28 (local time), Trump posted on social media platform Truth Social claiming that Iran’s Supreme Leader Khamenei “has died.” Close attention should be paid to developments to see if this triggers conflict or diplomatic shifts.

Signal 3: Whether Iran’s retaliatory measures substantially target key oil production facilities and shipping routes, which will impact market shocks.
According to Xinhua News Agency on February 28, oil tanker traffic through the Strait of Hormuz has stalled. Major global oil companies and energy traders have issued urgent directives to suspend all oil and fuel shipments through the Strait of Hormuz to avoid security risks from escalating conflict. Future developments should monitor whether these threats materialize.

Overall, if the three signals above do not show significant changes, the market impact could be viewed as an amplified version of the “Twelve-Day War” in June 2025; however, potential changes in these signals could lead to more extreme scenarios.

Historical reference: To assess potential market impacts, the bank reviewed the effects of eight major conflicts in the Middle East since 1970, summarizing the following patterns: safe-haven assets like gold outperform the dollar, oil prices are long-term supply and demand driven, U.S. stock performance is directly related to the level of U.S. military intervention and battlefield developments, and there is no significant impact on Chinese assets.

The review covered the initial asset price movements during the early stages of eight major Middle East conflicts (the Yom Kippur War, Iran-Iraq War, 5th Middle East War, Gulf War, Afghanistan War, Iraq War, Syrian Civil War, Israeli-Palestinian conflicts). Historically, in safe-haven assets, gold prices tend to be more significantly catalyzed by Middle East wars than the dollar. The bank judges that the phase of geopolitical catalysts for gold during war outbreaks is concentrated within about 10 days of the conflict’s start, with pre-war expectations playing a key role in price reactions.
Regarding energy, all three past oil crises were triggered by Middle East wars. However, due to changes in global supply patterns, the long-term impact of Middle East wars on global oil prices has been gradually weakening. The bank’s previous research indicates that if a war causes oil prices to rise more than 50% above pre-war levels, it may trigger a U.S. economic recession.

As for U.S. stocks, historically, if the U.S. does not directly involve itself in the war, initial market sentiment disturbances tend to recover within about a week; if the U.S. joins the war, market sentiment recovery depends on battlefield clarity.
For Chinese assets, due to the lack of a clear transmission mechanism from Middle East wars, historical data shows that market sentiment disturbances on the day of the outbreak tend to be mostly recovered by the next day.