Iran Conflict: How Long, and How Bad?

With the Iran conflict now in its fourth week, uncertainty around its duration and associated disruptions to energy supplies remains high amid continued swings between deescalatory and escalatory headlines. So how long could this conflict last? What's at stake for the key players? And what will it take to restore global energy flows? I'm Alison Nathan, and this is Goldman Sachs Exchanges. Each month, I speak with investors, policymakers, and academics about the most pressing market moving issues for a top of mind report from Goldman Sachs Research. This month, I spoke with Sanaam Vakil, direct

For Iran, this is seen to be a regime change war with objectives of overthrowing or destabilizing the Islamic Republic in a significant way. So the system or what remains of it is fighting for its very survival with the aim to spread the cost of the war horizontally and as widely as possible so that when off ramps do appear that this war is so costly for everyone that Iran could perhaps obtain guarantees that it will not be repeated again in six months or a year or in a few years when external powers might think that the time is right to revisit another round with the Islamic Republic.

So Iran is viewing this as an existential risk. Right?

Yeah. More than a risk. They weren't prepared for this war. They knew after last summer's war, the twelve day war, that there would be a boomerang effect from the Israeli strikes and The US entry because no side in the war really achieved full victory. The war showed for Israel that strikes on Iran were possible and that Israel had the capability of inflicting damage. The Israelis very much wanted to continue the war, but president Trump called time on the war after the b 52 struck at Iran's nuclear facilities. And Iran, also after the war ended, calculated that it conceded to the ceasefire to

Right. So they're fighting against that perception. But from the beginning, president Trump has wanted to portray this war as a short term conflict. How realistic is it that the conflict resolves soon?

President Trump has shifted the aims and objectives and timelines of this war since it began. He first indicated that this was gonna be quick and easy and that they would pause on day four or five of the war. And since then, the administration has been all over the place. And they quickly understood that Iran came ready for this war on February 28. And since then, they've been playing catch up. The costs of this war have spread quite significantly, not just through strikes across the Gulf States, but we've seen market impact on the energy side. The Strait Of Hormuz, while not formally closed,

But, Tanam, let me ask you. Is it even up to The US on when this war ends at this point?

I wish it was that easy. But what the Iranians learned from last summer's twelve day war is that this war also has to end in a conclusive way that benefits the Islamic Republic or what's left of it. What are they trying to achieve? They're trying to survive, and they're trying to guarantee their longer term survival through some kind of agreement that will prevent another round of conflict from emerging. And in tandem to that, of course, they have right now some very extreme zero sum demands, But, ultimately, what they really need is sanctions relief. And that is gonna require some sort of neg

But Iran is also bearing a tremendous cost in this conflict. So how long can it continue to do so?