Egan-Jones Examines a Possible Turning Point in the Middle East Conflict

NEW YORK, Aug. 20, 2026 /PRNewswire/ -- Egan-Jones released an analysis examining whether the Middle East conflict is nearing a resolution, and what a de-escalation centered on Saudi Arabia, Iran, and the Strait of Hormuz would mean for energy prices and global markets.

The potential catalyst is a signed United States civil nuclear cooperation agreement, which Washington has made conditional on Saudi Arabia joining the Abraham Accords and establishing formal diplomatic relations with Israel. Riyadh has not agreed, and continues to tie normalization to progress on Palestinian statehood. Egan-Jones notes that any such recognition would be connected to an opening of the Strait of Hormuz and a tempering of hostilities, possibly with compensation to Iran for passage.

The opening follows a period the firm describes as a Sisyphus cycle, after the figure in Greek myth condemned to push a boulder uphill without end. Iran, Israel, the United States and, to a lesser extent, other Gulf countries have been locked in a tit-for-tat pattern of destruction. All sides now appear to be recognizing that no participant can be an ultimate victor and that the cycle is expensive and counterproductive.

Saudi leverage rests on infrastructure. The kingdom, which holds the largest proven crude oil reserves in the Middle East, could expand its East-West Pipeline system, currently moving approximately seven million barrels a day, and route exports around the Strait altogether. Egan-Jones adds that a working bypass might deprive Iran of Hormuz toll revenue over the long run, though the pipelines would remain vulnerable to strikes.

The publication also sets out the case for caution: the region has repeatedly returned to conflict, and recent months have shown how little it takes to close the waterway. Set against that, the firm points to the political calendar in Washington, where midterm elections are approaching and a material decline in energy prices would make the war easier to explain.

The conflict has had a major impact on the global economy over the past few quarters and may be on the verge of a resolution, Egan-Jones concludes. Should that occur, the firm considers the shift relevant to most sophisticated institutional investors and risk managers.

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Egan-Jones, an NRSRO founded in 1995, offers timely and accurate credit ratings and proxy services.

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SOURCE Egan-Jones Ratings Co.