House Votes to End Iran Conflict Amidst Renewed Hostilities and Market Volatility

The U.S. House of Representatives has approved a non-binding War Powers measure, H.Con. Res. 93, with a 220–204 vote, urges U.S. forces to withdraw from the war against Iran. This is the third time the House has done this this year, showing that there is a growing consensus that the war is over. The resolution shows the House's opinion, but it doesn't make President Trump stop the military operation and is now being considered by the Senate, where the outcome is still unknown because of small majorities and approaching midterm elections.

The conflict has gotten worse over the last few weeks; early September saw U.S. and Iran trade intense attacks. These attacks aimed at military assets on both sides—Iranian air defenses as well as American bases in the Middle East. Iran has also stepped up its naval attacks against U.S. forces, including ballistic missile launches in seeming opposition to a U.S. naval blockade of Iranian ports. These conflicts have often interfered with vital energy supplies from the Persian Gulf, therefore affecting crude oil loadings and helping to raise the risk premium in oil prices.

Looking ahead, the legislative road to de-escalation remains difficult and will likely require Senate approval of a binding resolution or a shift in the White House's position. For market watchers, the main channels of transmission for the war remain the oil risk premium, shipping insurance prices, and geopolitical safe-haven flows into assets like the U.S. dollar, gold, and some cryptocurrencies. While more naval incidents would probably worsen these trends, any legitimate steps toward de-escalation might help to lower the war risk premium in oil markets and relieve pressure on rising market currencies.