50% probability Roubini predicts US escalation in Iran, viewing regime collapse as a potential outcome. He argues Trump and Netanyahu have incentives to escalate to avoid economic and international order risks. Oil prices could rise significantly, with a 10-15% increase deemed manageable. The conflict threatens to push inflation higher globally, forcing central banks like the ECB and BoE to raise rates sooner than planned. Regime collapse might offer medium-term benefits despite short-term oil shocks, but the risk of prolonged conflict remains high.

The Fed faces pressure to hike rates to prevent losing credibility, with leadership changes adding urgency.