US-Iran War – Why this war has to end; sooner rather than later

Will the ceasefire in the US-Iran war eventually result in the cessation of war? That is hard to say, but this is a war which nobody is going to win. Above all, the repercussions on global macros is too big to be ignored.

Straits of Hormuz remains the centrepiece

In a sense, it was smart thinking on the part of Iran that they made the Straits of Hormuz the nucleus of war. It could have been a West Asian war, but thanks to the Straits of Hormuz, the war has become an international issue. Iran understands fully well that it does not have to attack every ship passing through Hormuz. It has to escalate the risk of attacks, which will be enough. After all, with such high value cargo, no shipping company will take that risk. The impact is visible. The surge in oil prices has got transmitted globally. The US CPI inflation for March was 3.3%, a full 90 bps higher than the 2.4% reported in January and February 2026. Even Trump cannot ignore that.

Creating a pall of fear in the Middle East

Iran’s second move, other than using the Straits of Hormuz as a bargaining chip, was to create a pall of fear in the Middle East. Persistent attacks on UAE, Saudi Arabia, Oman, Bahrain and Qatar had 2 immediate repercussions. Firstly, the GCC nations were getting disillusioned with being US allies. Secondly, production of oil, petrochemicals and other derivatives came to a standstill in the region. That is having an impact much beyond oil and gas prices. Ahead of the monsoons, fertilizer companies are starved of gas and key oil-based inputs are not coming. That has virtually disrupted the supply chains of most products across the globe. Nobody wants that to continue.

US, Iran and Israel also want the war to end

For the US, outright win is not possible unless they launch a boots-on-ground strategy. The experience of Vietnam and Afghanistan was that boots-on-ground does not have a happy ending. Also, Trump’s popularity ratings have dipped sharply and he would want to redeem that. For Iran, the hope is that the war ends and they can get back to business. After all, the damage they have suffered is substantial. For Israel, the army is already exasperated with endless wars. Israel realizes that the longer the war continues, the more they face hostility in the GCC region. Israel was just about starting to repair its relations with the Middle East. The sooner it gets over, the better it is for everyone.

What will be the post war reality for Iran?

The US and Israel will declare victory and walk away from the region. They do not have much of a choice anyway. Iran may, in all possibilities, be allowed to collect toll from ships passing through the Straits of Hormuz. Iran will justify it on the grounds of war reparations, but eventually it will become permanent. For oil buyers, a levy of $1/bbl will not matter too much, as long as they are able to move oil, gas and intermediates in a smooth manner. Supply chain constraints may take some more time to stabilize and oil prices may stabilize at a higher new-normal. If that happens, Iran will clearly emerge as the most powerful West Asian nation after the war ends. That could be big!