The most benign outcome and the one that both sides have a rational interest in reaching before their respective clocks run out. A negotiated ceasefire would involve a pause in American military activity, a partial lifting of sanctions sufficient to allow Iranian oil exports to resume through the Strait, and a commitment to formal talks on a broader settlement of the nuclear and regional security questions that underlie the conflict. Iran has precedent for this kind of partial accommodation: the 2015 JCPOA was precisely this kind of structured de-escalation, trading nuclear constraints for sanctions relief.

The obstacle is political rather than diplomatic. The hardline leadership now in control in Tehran, which replaced the more pragmatic Rouhani-era figures who negotiated the original JCPOA, has a domestic constituency that regards any accommodation with the United States as a betrayal of revolutionary principles. Secretary of State Marco Rubio, whose political identity is built on maximum pressure against adversarial regimes, has limited incentive to offer the kind of face-saving formulation that would allow the Iranian leadership to present a ceasefire as something other than capitulation. The Russia exception — Trump permitting a single oil shipment to Cuba — suggests the administration is capable of tactical flexibility when it serves a specific purpose. Whether that flexibility extends to Iran is the central uncertainty.

If a ceasefire materialises within eight weeks, the oil price response would be rapid and significant. Brent crude, currently above $110 per barrel, would fall sharply as the Hormuz risk premium unwound. The speed and magnitude of the fall would depend on how quickly Iranian exports resumed and how much permanent damage had been done to Iran's wellhead infrastructure in the interim.

The most likely near-term outcome is not resolution but continuation. Both sides have enough capacity to sustain the current position for longer than markets are pricing. The United States can tolerate elevated oil prices and the associated inflation for several months before the political cost becomes prohibitive. Iran's hardline leadership has demonstrated across four decades that it can absorb economic punishment at levels that would destabilise most governments, partly through the IRGC's parallel economy and partly through a genuine ideological commitment to resistance that is not reducible to rational cost-benefit calculation.

In a prolonged standoff, the Hormuz closure becomes the new normal. Global supply chains adapt. The rerouting around the Cape of Good Hope, already underway, becomes entrenched. Alternative suppliers, principally the United States, Russia through non-sanctioned channels, and the Gulf states operating at expanded capacity, absorb as much of the demand as their infrastructure allows. The oil price stabilises at an elevated level, somewhere between $95 and $115 per barrel, that reflects both the genuine supply reduction and the ongoing uncertainty premium.

The most consequential variable in the prolonged standoff scenario is the rate of geological damage to Iranian wells. If storage fills and wellhead damage begins to occur at scale, the standoff effectively becomes irreversible: Iran loses productive capacity that no ceasefire can restore, and the supply reduction becomes permanent rather than temporary. This is the scenario that would be most damaging for the long-run global oil balance and that would keep prices elevated well beyond the end of the conflict itself.

The least likely but most consequential scenario is military escalation beyond the current standoff. Escalation could be triggered by an Iranian strike on American naval assets in the Gulf, a miscalculation by either side during a routine confrontation in the Strait, an Iranian decision to attack Kharg Island's own infrastructure to deny the Americans the option of seizing it, or a domestic political crisis in Tehran that produces a leadership more willing to risk open confrontation than the current hardliners.

Full-scale military escalation would take the oil price into territory that has no modern precedent. A scenario in which Kharg Island, which handles 90 per cent of Iranian oil exports, is destroyed or rendered inoperable would remove approximately 3 to 4 million barrels per day from the global supply base permanently, at a stroke. Combined with the closure of the Strait itself and the likely targeting of Gulf state infrastructure by Iranian proxies, the supply disruption could be severe enough to trigger a global recession through the oil price shock alone, independent of any direct military consequences.

For the Global South, escalation is the existential scenario. Oil-importing small island states with no strategic reserves, no domestic production and limited fiscal capacity to absorb price shocks would face energy supply crises that go beyond price: physical availability of fuel at any price becomes uncertain when the supply chains on which they depend are disrupted by active military conflict.