【The Logic Behind the US-Iran Conflict: War, Oil Prices, and America's 'Soft Debt Reduction'】

Many people view the U.S.-Iran conflict through a superficial lens: war breaks out, oil prices rise. However, focusing solely on this perspective may underestimate the underlying strategic game. In reality, while the United States and Israel have their own objectives in this conflict, their ultimate directions are aligned.

Israel's goal is very clear: to achieve a more stable security environment, to weaken or even end hostile regimes, while simultaneously destroying Iran's nuclear capabilities and its support for militant groups in the Middle East. The U.S. perspective is more complex. The U.S. also hopes to change Iran's current regime, but it is also well aware that Iran is a massive country whose regime has been in power for over forty years, with a population long subjected to anti-American and anti-Israeli education. Therefore, the situation cannot change rapidly in a short time. This also means the conflict may not end quickly.

From a U.S. strategic viewpoint, there are at least several key objectives. First, to reassert control over global oil resources, solidify the petrodollar system, counter the petroyuan, and maintain the U.S. dollar's financial hegemony. Second, to strengthen control over key maritime chokepoints, such as the Strait of Hormuz. Once regional tensions rise, the U.S. can increase its military presence under the pretext of "freedom of navigation," thereby enhancing its control over global energy transportation routes. Third, to compete in the marine insurance market. This sector has long been dominated by British insurers. If future maritime security is guaranteed by the U.S. Navy, American insurance companies will have greater opportunities.

But a deeper objective may be related to the U.S. debt problem. The current U.S. national debt has reached approximately $38 trillion, close to 120% of GDP, a historical high. Historically, when facing high debt pressure, the U.S. has often not directly repaid it but instead used a combination of inflation and low interest rates to "dilute the debt." Simply put, it allows inflation to outpace bond yields, thereby reducing the real value of the debt.

For example, in the 1970s, the U.S. faced multiple shocks including the Vietnam War, the oil crisis, and the collapse of the Bretton Woods system. Inflation at one point exceeded 10%, while bond yields were lower than inflation, resulting in a continuous erosion of creditors' purchasing power, effectively achieving hidden debt reduction. This method is considered the lowest-cost and most covert means of debt reduction.

Looking at historical experience, the U.S. may adopt a combination of "moderate inflation + low real interest rates" in the future. For instance, maintaining inflation around 3%-4% while keeping real interest rates low, gradually diluting the debt burden over time. Under this logic, rising oil prices could actually become a key factor driving inflation. Once tensions escalate in the Middle East, pushing oil prices higher, inflation will be transmitted into daily consumption.

Historical data shows that for every 10% increase in oil prices, inflation rises by about 0.4%. If oil prices remain between $80 and $90 for an extended period, U.S. inflation could stabilize around 3.5% or even 4%, which aligns perfectly with the "moderate inflation debt reduction" path.

From a market perspective, if the war persists and inflation expectations rise, the stock market may face short-term pressure as investors' expectations for interest rate cuts are continuously delayed. In such an environment, investment logic also needs to be adjusted accordingly.

First are precious metals and mineral resources, such as gold, copper, rare earths, and other hard assets. These assets typically have strong value-preserving capabilities in an inflationary environment. Second is the energy sector, including oil and gas companies, as high oil prices directly boost their profitability. Third is the defense and military industry; the longer the war lasts, the more these companies benefit.

In addition, there is a frequently overlooked sector—consumer staples. During inflationary periods, people still need to purchase daily necessities, so companies in industries like household chemicals, food and beverages, and large retailers often show relative stability. For example, daily consumer brands and chain retailers usually have strong resilience in a rising price environment.

Finally, the agriculture sector. Regardless of economic changes, food demand remains constant, so agricultural companies often benefit during inflationary cycles. Additionally, agricultural stocks typically have distinct seasonal patterns. After Q1 earnings reports are released each year, stock prices often pull back due to weaker sales in the previous winter, which may present buying opportunities. Subsequently, as spring demand recovers, the uptrend usually continues until mid-year.

Overall, if the world enters a phase of gradually rising inflation with relatively controlled interest rates, sectors such as resources, energy, defense, consumer staples, and agriculture may become key areas worth focusing on.