BCA Research warns investors against selling oil at current levels or buying stocks on the dip as the Iran conflict continues to unfold with potentially severe economic consequences. Matt Gertken, the firm's chief geopolitical strategist, advises maintaining risk-off trades while suggesting markets may be underestimating the scale of this geopolitical confrontation and its global implications.

The investment research firm assigns a 50%-87% probability of a major oil supply shock following recent U.S. strikes against Iran. With the Strait of Hormuz largely closed to traffic, roughly one-fifth of global oil supply is now blocked, potentially causing the largest energy shock in modern history. Iran retains asymmetric capabilities and strong incentives to escalate the economic costs of this conflict.

Energy markets remain the primary transmission channel for this geopolitical risk, with Europe and China particularly vulnerable to sustained price increases given their heavy oil import dependence. BCA has positioned defensively with overweight Treasuries and overweight U.S. equities relative to European and Chinese markets. The firm will maintain its long oil trade until confident Iran cannot mount further attacks on regional infrastructure and shipping lanes.