In a late Tuesday phone interview with NBC News, US President Donald Trump said he thought the war on Iran was “coming to an end”. He said oil prices would fall once the US left Iran, adding that this would happen “very soon” and prices would “come tumbling down”.
On the Strait of Hormuz, he said keeping it open was “not for us” and would be for France or other users of the strait. He also said, “We’re doing great”, and repeated that it was coming to an end.
Market Focus Shifts
Trump said the people the US was dealing with in Iran were “more reasonable” and “not as radicalised”. He said the US would not allow Iran to have nuclear weapons.
He said he had “a war to prosecute” and that the US was “finishing the job”. He estimated “in two weeks or maybe a few days longer” to “do the job”, and said the aim was to “knock out everything they’ve got”.
Market moves showed the US Dollar Index (DXY) near 99.80, down 0.10% on the day at the time of writing, alongside a return of risk appetite.
We remember when these statements were made last year, signalling a major de-escalation and shift in Mideast policy. The initial reaction in 2025 saw oil prices fall sharply, with Brent Crude dropping below $80 per barrel for the first time since the conflict began. This has set the stage for the market’s current complacency.
Today, the CBOE Crude Oil Volatility Index (OVX) is trading near 28, a 24-month low, showing how little risk is priced into the market. We’ve seen shipping insurance premiums for tankers passing through the Strait of Hormuz fall by over 60% since the fourth quarter of 2025. This tells us the market fully believes the threat of a major supply disruption from that region is gone.
Trading Implications For Volatility
This period of low volatility presents a clear opportunity for derivative traders. Buying cheap, long-dated call options on Brent or WTI is an effective way to position for any unexpected return of geopolitical tension. The market has forgotten that a US withdrawal from policing the Strait of Hormuz creates a power vacuum, making the supply route fragile to new threats.
Historically, after the initial relief of the 2015 Iran Nuclear Deal, oil markets remained volatile due to other factors, like OPEC production disputes and global demand shifts. We see a similar setup now, where the focus has shifted away from a single conflict, leaving the market underpriced for new surprises. A small disruption could now have an outsized impact on prices precisely because the risk premium has vanished.
The US Dollar Index’s (DXY) weakness at the time reflected a classic “risk-on” move as war fears subsided. Currently, with Mideast tensions on the back burner, the dollar’s movement is almost entirely tied to inflation data and Fed interest rate expectations. Traders should consider options on currency pairs like the EUR/USD to play future volatility stemming from diverging central bank policies, rather than geopolitics.
