Early this morning, U.S. President Donald Trump stated that the war in the Middle East will soon come to an end and that the United States will begin moving in to take control of the Strait of Hormuz.
This news immediately caused oil prices to drop sharply to below $85 per barrel compared to the strong surge seen yesterday morning.
Immediately, correlated markets such as stocks and gold also rebounded strongly, approaching the important resistance level of $5,200 per ounce.
However, although the United States has declared that the war will end soon, Iran has not yet responded, so this reversal may only be temporary until Iran issues its reaction.
The fact that Iran’s new leader is the son of the former leader further strengthens Iran’s stance of a strong response, so whether Iran wants to end the war sooner will depend on whether this leader is willing to sit down for negotiations.
In the short term, the market is likely to witness a strong sideways movement before Iran makes a response to the United States.
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