NEW YORK -- he world's oil and financial markets are preparing for a wild ride as the Persian Gulf crisis comes to a head. While there's no guarantee about when or how the turmoil will end, market experts expect that the United States and its allies would swiftly beat Iraq, and they are planning their investments accordingly.

The setting of Jan. 15 as the deadline for Iraq to withdraw from Kuwait or face a U.S.-led military strike has raised the prospect that the most important factor affecting the markets in early 1991 could be the outbreak of war.

Already, most of the big Wall Street investment houses have held strategy meetings to figure out what to do if diplomacy fails. Several have drawn up lists of stocks to buy or sell if and when the first shots are fired. The investment community is awash in research reports discussing such topics as how the stock market reacted in the past when wars began and which defense stocks are likely to benefit from a conflict.

The results of all this brainstorming are quite consistent. There is a broad-based consensus that the onset of war would trigger a sharp spurt in oil prices, perhaps to as high as $50 a barrel, and a "mini-crash" in the stock market that would pull down the Dow Jones industrial average by as much as 200 points.

Despite the popular view that war is "good" for the economy, the financial markets almost invariably fall sharply when fighting breaks out, owing primarily to the intense uncertainty that inevitably accompanies combat. In the case of the Persian Gulf, such anxiety is compounded by the risk that fighting could affect world oil supplies and, particularly, that Iraqi planes or missiles might damage Saudi Arabia's oil production facilities.

"The outbreak of shooting in the gulf would in all likelihood lead to a decline in the stock market immediately thereafter," said a recent report by the New York securities firm PaineWebber Inc. "Five previous major outbreaks of shooting have resulted in an initial sell-off in stocks," it said.

Nevertheless, there is a surprisingly strong conviction on Wall Street that the crisis is likely to be over and forgotten by next summer. The dominant feeling in the financial markets is that the U.S.-led alliance enjoys such overwhelming military superiority over Iraq that a relatively quick victory -- either diplomatic or military -- is virtually assured.

Bernard J. Picchi, a managing director and senior petroleum analyst at Salomon Brothers Inc., a leading New York investment firm, predicted that U.S. air superiority and high-tech weapons would crush the Iraqi military. "It's almost like the German tanks against the Polish cavalry," when the Poles were routed at the start of World War II, he said.

"One way or another, Iraq is leaving Kuwait," Picchi said. "The question is whether they leave under their own volition or in the heat of battle."

As a result, there is considerable speculation about the possibility that oil prices could fall right back down again, and stock prices could bounce up, within just two or three days of the start of the war as it becomes clear that the United States and its allies have the upper hand.

"I think you could actually see the stock market rally back above where it had been before {war started}, provided it appeared that the war was going to end quickly, and with limited damage to oil fields or equipment," said Mary C. Farrell, a first vice president and market strategist at PaineWebber.

Wall Street's near-complacent attitude about the Middle East was evident last Tuesday at the annual New York economic outlook seminar sponsored by T. Rowe Price Associates Inc., a large Baltimore-based mutual funds company.

In a two-hour presentation by five top T. Rowe Price executives, who discussed investment prospects for 1991, the Persian Gulf confrontation was mentioned only three times, and then only briefly. The five focused their attention principally on the likely impact of Federal Reserve Board policy on interest rates and on the impact of the current economic slowdown.

Asked why the possibility of war had attracted so little interest, M. David Testa, a T. Rowe Price managing director and expert on foreign stock markets, said the Persian Gulf crisis was "unlikely to be a long and dragged-out affair -- people have been discounting this problem."

George J. Collins, president of T. Rowe Price and a former Air Force officer, added that the U.S. military seemed determined to "get there fastest with the mostest," and thus win the war quickly. "They won't get bogged down," he said.

Few people enjoy thinking of the likely impact of war, and many experts interviewed mentioned that they felt uncomfortable, and even heartless, discussing the economic impact of events that could cost thousands of lives. But Wall Street analysts must ponder anything that affects the markets, and that certainly includes the chance that combat will erupt in the Persian Gulf oil fields.

"It's kind of sad that you have to think about it," said Gerry Angulo, president of First Capital Advisers Inc., a money management firm here. He said, though, that he was planning to use a war as an opportunity to "bottom fish," or hunt for bargain prices for stocks. "There will be bottom fishing. I'll bottom fish."

Four Months of Market Turmoil The markets already have been whipsawed by events in the Middle East for more than four months, ever since the crisis was precipitated by Iraq's invasion of Kuwait Aug. 2. Last week, a flurry of peace signals, highlighted by Iraqi leader Saddam Hussein's pledge on Thursday to free all hostages by Christmas, sent the price of oil back down to its lowest level in three months. Stock and bond prices rallied at the news before fading later in the day.

But many analysts believe that war is still a strong possibility and that the markets overreacted to the latest peace overtures just as they had overreacted in October to the expectation that war was imminent.

"It seems that the market has been overreacting to events, both in terms of thinking that we're very likely to go to war, and then that we're very likely not to," said Thomas D. Gallagher, a first vice president and Washington-based political analyst for Lehman Brothers Inc., a leading New York investment firm.

The markets have been swinging so quickly, sometimes in response to rumors or unconfirmed reports, that most traders and investment professionals say that it is impossible to make precise forecasts about how oil or stock prices will react to events. As a result, the strategies prepared by the various investment houses and portfolio managers tend to be drawn in broad, flexible terms.

"We don't try to fine-tune it. We don't believe we have any crystal ball," said Robert D. Hormats, vice chairman of Goldman Sachs International, a branch of the prominent New York investment bank Goldman Sachs & Co.

Instead, Wall Street has prepared various scenarios for events in the Persian Gulf, and it has considered how each would affect the price of oil, the economy, and therefore the stock and bond markets. These analyses have focused on two dominant issues: the effect of any conflict on Saudi oil facilities, and the very different results of a long war and a short one.

Many experts believe that the financial markets could ride out a short war, without much long-term damage, as long as Saudi oil production is secure. "The main thing the markets will be interested in is the threat to the Saudi oil fields," Lehman Brothers's Gallagher said.

A key reason for Wall Street's confidence in a U.S. victory is its belief that Iraq will be unable to do much damage to the Saudi facilities. Many analysts pointed out that in the Iran-Iraq war, Iraq failed to hurt Iranian oil production significantly, even though Iraq's air force ruled the skies and Iranian defenses were much weaker than the Saudis'.

In that war, Iraq "had every advantage in the world, including complete domination of the air ... {but} for the first three years of the war, Iranian oil production actually increased each year," Picchi said.

The other critical factor is the length of the war. A relatively short conflict, perhaps four to six weeks, that ended with a victory by the United States and its allies would be bullish for the markets, analysts said. A prolonged conflict, however, would be likely to keep oil prices high, push up the federal budget deficit and weaken President Bush's political leadership.

"A relatively short war would probably be a plus for the markets. It would remove the sort of dark cloud over them," said Hormats of Goldman Sachs, who was assistant secretary of state for economic and business affairs from 1981 to 1982. "A long war would have a very serious effect. It would probably disrupt shipping in the gulf, and it would probably mean that the government would be consuming huge amounts of capital."

Limited Impact of a Short War An important difference between a Persian Gulf war, and others that the United States has waged in this century, could be a relatively limited positive impact on the economy, according to some analysts.

"If you look at World War II or Vietnam, we revved up with a lot of production, but this war is being fought with a lot of equipment that's already there," PaineWebber's Farrell said. "This one would not be positive {for the economy} in the same sense."

Paradoxically, many analysts said that the markets would respond better to a short, successful war than to a diplomatic settlement that got Iraq out of Kuwait but left Saddam in a relatively strong military and political position in the gulf. In that event, the oil and financial markets might fall into a state of permanent anxiety, because Iraq would be in a position to continue to intimidate its oil-producing neighbors.

"I would think the markets would be only partially relieved by that, because he {Saddam} would still be there in his cage and capable of breaking out of it. You wouldn't want to sleep in the same room as a tiger, even if he were in a cage, and that would be the case," Hormats said.

Many market strategists said they would avoid speculating in the event of war because the risk of guessing wrong would be high.

For example, the manager of a large bond mutual fund said he would be very conservative in his trading at the outset of a war, even though he is pretty sure that the initial result would be a fall in bond prices that would prove to be only temporary.

"If one had a lot of guts, I think it would be a buying opportunity," said the bond trader, who asked to remain unidentified. He said he might bet 5 percent of his portfolio on that scenario, but no more.