2026-03-09 04:11:00
What a scintillating start to the new week this is. Oil prices have surged by well over 20%, poised for its largest one-day gain on record. And we’re talking about prices near $120 again after having initially hesitated to get above $80 last week.
I mentioned last week already that the $80 mark was the key barometer for the temperature in the room:
“The $80 mark is a key line in the sand now. A push above that suggests that traders are growing ever more nervous about the Middle East conflict. Keep below and it leans more towards simmering tensions with hopes that things will settle down soon enough. If traders get around the idea of holding above $80, I’m afraid we might get a rush to much higher levels and even see talks about triple digits quite quickly.”
Even so, the pace of the move we’re seeing is absolutely wild. I guess the initial market reaction the US-Iran conflict played a part in playing down expectations before this latest parabolic move up.
So, what’s next?
The next step is all about what comes next in the conflict. And I would argue that we might have gotten the biggest indication from US president Trump here. He touts that oil prices will come down again “when the destruction of the Iran nuclear threat is over”. The word “destruction” there can take up a lot of different meanings. However, the message is clear that he is definitely feeling the pinch of higher oil prices and he wants to deal with that as soon as possible.
What I’ll closely be watching for next will be Trump’s appetite for the war to continue. The thing is even if the US pulls back now, does that mean Iran and Israel will stop? It’ll be hard for the US to put a complete stop to missile strikes and retaliation in the region immediately, but at least it’ll be a start.
But what is it about Trump’s appetite that is so interesting?
The thing is, everything that he hates is what is happening in markets right now.
- Higher oil prices ✔
- Lower stock market ✔
- Weaker conviction by the Fed to cut rates amid inflation fears ✔
- Higher bond yields/rates ✔
- Stronger US dollar (to some extent) as the trade war rages on too ✔
At some point, even the big boss man himself has a pain threshold that he cannot handle. The question is, where will the line be drawn before we see the TACO trade kick in?
