Crude oil rallied 5.5% Tuesday on Middle East supply fears before partially reversing on Trump's comments that US-Iran negotiations are "moving fast" with a deal possible within one week. The round-trip move in a single session tells you exactly how much uncertainty is priced into energy markets right now: the initial 5.5% surge was fear, the partial reversal was relief, and neither has resolved the underlying situation.

A formalised Iran nuclear agreement would have concrete market implications. Iranian production, constrained by sanctions, could add an estimated 1 to 1.5 million barrels per day to global supply relatively quickly post-deal. At current demand levels, that addition would put meaningful downward pressure on Brent. The 5.5% rally and more could reverse in a compressed timeframe.

From a portfolio risk management standpoint, the binary nature of this outcome is the problem. Deal happens: energy positions face sharp reversal. Talks collapse: Strait of Hormuz risk returns and oil moves materially higher. That kind of binary tail risk argues for reducing directional energy exposure rather than holding large outright positions in either direction. I am not comfortable sizing this as a directional bet when the outcome depends on diplomatic progress that changes by the hour.