Hey Trader,
The U.S. has now been in conflict with Iran for over five months.
Every time a “deal” gets announced, oil prices fall. Every time a ceasefire or pause breaks down, oil prices climb.
You might be confused and wondering a few things, like I am. Why does anyone believe a deal is viable when it looks like nothing more than rhetoric, or worse, manipulation of the financial markets?
Why would Iran even consider going back to the table when every time they have tried, they get bombed again? Why does the U.S. keep trying when Iran won’t make the concessions it demands?
There are a lot of questions right now that don’t have answers. Some of them may never get one.
Since I love analogies, let me float one your way.
This “deal,” the Memorandum of Understanding (MOU), and the negotiations around it remind me of a prank we have all seen. There’s a driver in the car and someone standing outside of it.
Usually they’re friends. Let’s set that part aside for now.
The driver tells the passenger to “get in.” As the passenger reaches for the handle, the driver taps the gas and rolls forward ten feet.
The passenger shrugs, walks up again, and the car stops. As they approach, the driver calls out, “get in,” one more time.
The passenger reaches a second time, and the driver lurches forward. The passenger grumbles, “come on,” then tries again.
“No really, just get in,” the driver says. The passenger reaches, the car rolls forward, and out comes an exasperated “REALLY?!”
We’ve all seen this play out, or been part of it, as driver or passenger. A friend might pull this four or five times before it stops being funny and they finally let the person in.
Why does the passenger keep trying? Is their trust in the driver growing?
No, it is quite the opposite. They expect the driver to keep acting up.
They keep trying because there isn’t really another way to get where they’re going. They know that to reach their destination, they need to get in that car.
In this analogy, the U.S. and Iran are both driver and passenger. Each side has things it considers nonnegotiable, and each side keeps rolling the car forward, just out of the other’s reach.
They both need to get to their destination. Getting there means someone eventually gets in the car.
They’re stuck. Sooner or later, one of them has to let the other in, so they’ll keep reaching for the handle.
That’s why neither side has fully walked away. It was never about trust.
Neither side has earned any. Both have lurched the car forward at least once.
It comes down to timing. When will one side finally let the other in so they can both reach the destination of resolution?
In the meantime, expect both to keep playing driver. They will breach ceasefires, pull attacks, and keep the handle just out of reach, even while they grab for the other’s door.
For me, I won’t believe there’s a real deal, that either side has actually gotten in the car, until I see it driving away.
That means U.S. troops leaving the region and oil exports resuming at full capacity.
Until then, I’ll keep watching the prank play out, distrusting the behavior on both sides, and expecting oil prices to spike again after every drop, with inflation staying stubbornly high.
Be safe out there. Wait for a ride you can actually trust.
Blake Young
Senior Market Strategist, TheoTRADE
