The Craft of Walking Away from the Table

Trump Extends Iran Deadline, Markets React Sharply

Yesterday, President Trump announced an extension to the 48-hour ultimatum he had previously issued to Iran on Saturday evening. This unexpected move sent shockwaves through the financial markets. As illustrated in the chart below, Brent crude oil prices plunged by 12% within minutes, reflecting investor expectations of a shorter conflict and a quicker reopening of the Strait of Hormuz.

Over the past week, I have been challenging some of the more dire predictions that suggested Brent oil could soar to $150 or even $200 per barrel, including during a recent conversation with Paul Krugman.