TACO knocks Brent down

TACO knocks Brent down

Brent plunged by 14% right after Donald Trump’s statement that the US would not bomb Iran’s energy infrastructure for five days and that Tehran is in talks with the US. Investors have adopted the ‘TACO’ or ‘Trump Always Chickens Out’ trading strategy, which gained popularity after the White House introduced tariffs on America’s Liberation Day. It helped propel the S&P 500 up by 37% by the end of 2025, following a 12% slump days after the announcement.

Crude Oil fell thanks to TACO. According to the Vitol Group, traders continue to bet that the conflict in the Middle East will end sooner rather than later. At the same time, every additional week of the Strait of Hormuz blockade deprives the black gold market of 70 million barrels. Goldman Sachs forecasts that the world’s largest oil artery will be virtually closed for six weeks, followed by a month of full restoration of transport flows. Under this scenario, the market will be short of 800 million barrels. 

It will take months for Gulf countries to restore production. Even assuming a relatively swift end to the conflict, Societe Generale and ANZ Research predict that Brent will not return to pre-war levels of 65 to 70 dollars until at least the end of this year. Macquarie expects that if this does not happen, Brent crude will soar to $150 per barrel.

Meanwhile, Saudi Arabia is considering joining the US-Israeli coalition, which would mark a significant escalation of the geopolitical conflict.

Iran denies negotiations with the US are taking place. Tehran believes that the White House is manipulating the oil market in this way. It is curious that 15 minutes before Donald Trump’s social media post, the equivalent of around 6 million barrels of Brent changed hands in the form of futures contracts in the space of two minutes, which is almost ten times larger than the average for this time. Simply put, someone has placed a large bet on a fall in crude prices.

By the FxPro Analyst Team