Just now, Trump delivered a prime-time televised speech, which global markets had been eagerly awaiting. During the speech, Trump claimed that the war was &#34;very close to being finished ... we will complete the mission very soon.&#34; However, before concluding his speech, Trump announced that the U.S. would carry out &#34;extremely powerful strikes on Iran ... if no agreement is reached, we will strike Iran's power facilities.&#34; In other words, Trump announced an escalation of the war with Iran. The world fell silent; crude oil surged 5%, U.S. stock index futures dropped, and Asia-Pacific markets turned from gains to losses.
Two days ago, Trump announced that U.S. military forces would begin withdrawing from the Middle East within two to three weeks. This statement immediately impacted global financial markets. Crude oil prices, which had soared significantly after the outbreak of war in late February, dropped below $100 per barrel. The U.S. market also recorded its best single-day performance in over a year; investors expected lower energy costs and reduced geopolitical risks, leading to a rise in the S&amp;P 500. However, a realistic analysis of the situation shows that while the risk of a protracted U.S. war may decrease, the root causes of geopolitical instability and disruptions to global trade remain unresolved. The market reacted to the prospect of withdrawal, but it has not yet fully factored in the reality that the Strait of Hormuz will likely continue to impose tolls, nor has it fully reflected the specific demands made by the Iranian government.
The current drop in oil prices reflects a &#34;relief trade&#34; based on hopes for a turning point in the conflict. For most of March 2026, oil tanker traffic plummeted 90% due to the closure of the Strait of Hormuz to most international shipping, keeping oil prices high and volatile. Reopening these shipping lanes is critical for global energy supplies, as roughly 20% of the world's oil passes through this chokepoint. While Trump stated the U.S. no longer needs to defend the strait and that other countries should manage their own maritime security, a U.S. withdrawal will create a power vacuum in the Middle East. In the absence of U.S. naval power, the Islamic Revolutionary Guard Corps (IRGC) has begun formalizing its control over the waterway. This shift is not a return to the previous status quo of free navigation, but rather the start of a regulated maritime shipping regime where passage depends on political alignment and the payment of specific fees.
The Iranian President has publicly stated that the war can end if two conditions are met: first, compensation for losses incurred during the conflict, and second, formal guarantees that Iran will no longer be attacked. Realistically, while these demands reflect Iran's current posture, they remain far from U.S. requirements and pose significant hurdles to a lasting peace treaty. Direct payments to Iran are politically impossible in the U.S. and would likely be viewed as capitulation rather than a diplomatic resolution. Furthermore, once U.S. forces withdraw from the region, guarantees against future attacks become difficult to enforce. Without a substantial military presence as a deterrent or buffer, the risk of direct conflict between Iran and Israel remains high. Iran is using these demands as bargaining chips, but the gap between Tehran's requests and Washington's bottom line remains vast.
The stance of the IRGC is far more hardline than that of the President. Through official media channels, the IRGC stated that they will decide when the war ends, regardless of when the U.S. withdraws. Recently, the IRGC expanded its target list to include U.S. tech companies, specifically naming Google, Apple, and Tesla. The IRGC claims that AI and tracking technologies provided by these firms were used to facilitate the assassination of Iranian leaders. They threatened to destroy the physical infrastructure and facilities of these companies if the current strikes against Iranian leadership continue. This indicates that the conflict is entering an asymmetrical phase where corporate assets and digital infrastructure will face risks even as traditional military engagement decreases. The current rally likely underestimates this factor.
Logistics in the Strait of Hormuz have fundamentally changed. Before the conflict, daily vessel transits averaged about sixty. According to the latest data from satellite tracking and the IMF PortWatch system, this has dropped to an average of approximately three ships per day. Most vessels currently navigating the strait use a designated &#34;safe corridor&#34; within Iranian territorial waters. To use this corridor, shipping companies must provide the IRGC with detailed cargo manifests, crew lists, and identification codes. No one can pass without IRGC approval. Additionally, the Iranian Parliament recently passed the &#34;Strait of Hormuz Management Plan,&#34; imposing formal tolls on commercial vessels. Market participants describe these as &#34;tolls&#34; for passage.
The cost of these tolls directly impacts oil prices per barrel. For example, for a Very Large Crude Carrier (VLCC) typically carrying two million barrels, a $2 million toll adds exactly $1 per barrel. Smaller tankers carrying one million barrels face an additional cost of $2 per barrel. Although these amounts are small relative to the total price of oil, they represent a long-term increase in logistics costs. When combined with other fees, the total &#34;Hormuz tax&#34; becomes substantial. For instance, war risk insurance premiums have risen to approximately 5% of a vessel's hull value. For a $100 million ship, the insurance for a single transit would be $5 million. This insurance cost alone adds another $2.5 per barrel for a VLCC.
Currently, over eight hundred vessels are anchored outside the Strait of Hormuz, awaiting security guarantees or lower insurance rates. The cost of these idling vessels, known as demurrage, is roughly $100,000 per ship per day. Totaling Iran's tolls, increased insurance, and demurrage, the structural cost increase for oil shipped from the Persian Gulf is around $5 per barrel. Therefore, the war premium for oil, even if Trump withdraws and the Strait of Hormuz reopens, will reach $5-10 per barrel.
Sharp fluctuations in global markets and oil prices make risk difficult to price, but the fixed-income market offers a different perspective. Our quantitative models also conflict with fundamental logic.
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At 9 p.m. Eastern Time on Wednesday, Trump delivered a national address, claiming a "rapid and decisive victory" in the US military's war against Iran and stating that core strategic objectives were nearing completion. He emphasized that Iran would never be allowed to possess nuclear weapons and called the US strikes on Iranian nuclear facilities a "huge success." Regarding the Strait of Hormuz, Trump encouraged countries to "take responsibility for themselves" without providing a clear timetable for its reopening. Escalating tensions in the Middle East have put markets on edge, and the US military may intensify its strikes in the coming weeks. Will the US-Iran conflict end quickly as Trump hopes? How will the energy market evolve?

At 9 p.m. Eastern Time on Wednesday, Trump delivered a national address, claiming a "rapid and decisive victory" in the US military's war against Iran and stating that core strategic objectives were nearing completion. He emphasized that Iran would never be allowed to possess nuclear weapons and called the US strikes on Iranian nuclear facilities a "huge success." Regarding the Strait of Hormuz, Trump encouraged countries to "take responsibility for themselves" without providing a clear timetable for its reopening. Escalating tensions in the Middle East have put markets on edge, and the US military may intensify its strikes in the coming weeks. Will the US-Iran conflict end quickly as Trump hopes? How will the energy market evolve?

Trump's tough stance: Is the war with Iran nearing its end?

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In a prime-time address, Trump announced an escalation of the war with Iran, triggering sharp market reactions with crude oil surging 5% and U.S. stock futures falling. Despite Trump's earlier pledge to withdraw U.S. troops from the Middle East within two to three weeks, the market's response failed to fully account for the reality of ongoing tolls in the Strait of Hormuz. The decline in oil prices reflects hopes for a turning point, yet a power vacuum in the region could lead to geopolitical instability. Iran's president stated the war could end under specific conditions

- Following Trump's prime-time address announcing a potential escalation of war with Iran, global markets reacted with crude oil prices rising by 5% and U.S. stock futures declining.  
- The ongoing conflict has fundamentally altered logistics in the Strait of Hormuz, with ships facing new fees and restrictions, increasing operational costs by approximately $5 per barrel of oil.  
- These developments signal a significant shift in the geopolitical landscape, as Iran asserts control over maritime passage, which could impact global energy supply and pricing dynamics.

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