Oil falls 4% as Trump signals possible end to Iran war within weeks

Highlights

Trump said the U.S. operation against Iran could end within two to three weeks.
Iran continues to deny the existence of official negotiations with the U.S.
Oil has fallen, but the market is still pricing in the risk of renewed disruptions through the Strait of Hormuz.

According to Bloomberg, Donald Trump said the U.S. military operation against Iran could end within two to three weeks, while Iran continued to deny the existence of official talks and said any end to the war would require security guarantees and control over the Strait of Hormuz. Against that backdrop, investors are trying to decide whether to price in a near-term end to the conflict or a more prolonged scenario with continued disruptions to logistics and oil exports.

Oil between hopes for peace and the risk of another spike

Trump told reporters that the United States could end the offensive phase of its operation in Iran within two to three weeks, and that countries dependent on shipments through the Strait of Hormuz should bear more of the responsibility for the route. At the same time, the White House announced that the president would address the nation on Iran on Wednesday evening, while additional US forces, including a third carrier strike group, continued to move into the region.

The market responded by removing part of the geopolitical premium. At the time of publication, WTI was trading at about $97.61 a barrel, while Brent was around $99.34, with both benchmarks down roughly 4%. On Tuesday, however, prices had climbed above $107 a barrel amid escalating tensions and threats to shipping through Hormuz, and there were also sharp intraday swings after Trump signaled a possible delay in strikes on Iranian energy infrastructure.

Talks remain in doubt

The main problem is that the political signals remain mixed. The U.S. side continues to speak about contacts, but Iranian Foreign Minister Abbas Araghchi has said publicly that there are no official negotiations. Bloomberg also reported that Tehran had put forward its own conditions, including the issue of control over the Strait of Hormuz, meaning that even if the intensity of the fighting declines, the central point of tension will not disappear.

That view is also shared in commodity markets. UBS commodities head Dominic Schnider warned that the market may be underestimating the risk by assuming normalization will come quickly. In effect, investors are trading not the fact of restored exports, but the hope of it, even though the region logistics and infrastructure system has already suffered damage.

What this means for the market next

Even if military operations are indeed wound down within two to three weeks, this route will not automatically return to full capacity. That is why the decline in prices looks more like a repricing of expectations than a final disappearance of risk.

For businesses and investors, this means the market will remain highly sensitive to any statement coming out of Washington, Tehran and the Gulf states. As long as the U.S. talks about a near-term exit from the conflict, Iran rejects official talks, and allies remain divided over the future of the Strait of Hormuz, the oil market is likely to remain in a mode of sharp swings rather than a sustained move lower.

In an earlier report, we noted that oil tops $115 as fears over Iran war intensify.

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