Bank of America: The US-Iran conflict currently has limited impact on the Japanese stock market

Investing.com - On Monday, Bank of America stated that although the situation remains highly unstable, large-scale military actions by the U.S. and Israel against Iran are not expected to cause serious impacts on the Japanese stock market.

The company’s global commodities research team’s baseline scenario predicts a repeat of June 2025, when Iran’s new leadership adopts a pragmatic stance and limits its retaliatory actions. In this scenario, Brent crude oil prices may temporarily spike above $80 per barrel, but once the conflict subsides, they are expected to quickly fall back into the $60-70 range. The company also believes that if Iran’s new government maintains a hardline stance, Brent crude could rise above $100 per barrel.

Bank of America pointed out that the Middle East’s economy is relatively small and geographically distant from major economies. Historically, tensions in the region only significantly impact the global economy when oil prices surge. The increase in U.S. shale oil production has also reduced the global economy’s sensitivity to oil price fluctuations.

According to Japan’s Agency for Natural Resources and Energy, as of December 2025, Japan has 146 days’ worth of oil reserves. Even if Iran blocks the Strait of Hormuz, it is unlikely to cause immediate severe effects.

Bank of America stated that U.S. full-scale military involvement could make it difficult for Iran’s new government to maintain a hardline stance over the long term. The Strait of Hormuz is a major route for Iran’s oil exports; a long-term blockade would severely damage its revenue and diplomatic relations.

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