ANALYSIS: Oil Prices Plunge After a Remark by Trump — and No One Is Asking the Right Question

Tehran Faces the American Trap

To understand this situation, one must think like Tehran. The Iranian regime has been under maximum sanctions since 2018—the “maximum pressure” policy launched by Trump himself during his first term. The Iranian economy is in tatters. Inflation exceeds 40%. The rial has lost more than 80% of its value in six years. The population is growing restless.

In this context, agreeing to “talks” with Washington is not a sign of weakness—it is a survival tactic. Iran is buying time. Every day without an airstrike is one more day of oil exports to China, one more day of revenue to fund Hezbollah, the Houthis, and Iraqi militias.

The nuclear program: the elephant in the negotiating room

No one is talking about oil in these negotiations. Everyone is talking about nuclear power. Iran is now closer than ever to the capability to enrich uranium to weapons-grade levels. The IAEA reports are unambiguous: Tehran possesses enough 60% enriched uranium to produce several nuclear weapons within a few weeks. The question is no longer “if” but “when.”

And while Trump talks about “productive talks” on oil, Iran’s centrifuges are spinning. Twenty-four hours a day. Seven days a week.

Gaza, Lebanon, Yemen: The War That Won’t End

Trump has said he wants to “resolve the war in the Middle East.” Which war, exactly? The one in Gaza, where more than 40,000 Palestinian civilians have died, according to local health authorities? The one in Lebanon, where Hezbollah and Israel have been clashing for months? The one in Yemen, where the Houthis continue to fire missiles at commercial ships in the Red Sea?

These conflicts are interconnected. Iran is funding, arming, and coordinating militias across four simultaneous theaters of operations. The idea that a phone call between Washington and Tehran could “resolve” this architecture of violence is either astonishingly naive—or calculated cynicism.

The Red Sea, the Wounded Lifeline of Global Trade

Houthi attacks in the Red Sea have forced hundreds of ships to sail around Africa via the Cape of Good Hope, adding two weeks and millions of dollars to each voyage. Marine insurance premiums have skyrocketed. Freight costs have doubled on some routes. And the Houthis, armed by Iran, have shown no signs of slowing down.

An agreement on Iran’s nuclear program will not resolve the Houthi issue. A ceasefire in Gaza will not disarm Hezbollah. And five days of “productive talks” will not change the geography of violence.

But trading algorithms don’t read geography. They read keywords.

The Reign of Algorithms and Instant Reaction

Here is the fundamental problem. Oil markets no longer function as supply-and-demand mechanisms. They function as machines that interpret words. A president says “productive,” and high-frequency trading algorithms sell millions of contracts in milliseconds. Not because the global supply of oil has changed. Not because demand has fallen. Because a word was spoken.

This is what experts call “narrative trading”—trading based on narrative, not reality. And this phenomenon is turning energy markets into geopolitical casinos where the dealer is the President of the United States.

The disconnect between prices and fundamentals

Let’s look at the fundamentals. OPEC+ has announced gradual production increases. Chinese demand remains fragile. U.S. inventories are comfortable. But none of this explains such a sharp collapse in a single trading session. What explains it is mass psychology amplified by technology.

And yet, the underlying geopolitical reality hasn’t changed one iota.

A strategy that has a name: deliberate unpredictability

Richard Nixon had his “madman theory”—making the enemy believe he was unpredictable enough to press the nuclear button. Trump has taken this logic to the extreme. Threaten, then reassure. Escalate, then back down. Insult, then flatter. The cycle has become so rapid that markets, allies, and adversaries never know where they stand.

That is exactly the point.

The Five Days That Mean Nothing

Trump has postponed the strikes by five days. Why five? Not ten. Not thirty. Five. It’s short enough to keep the pressure on. Long enough for the markets to react. And vague enough that no one can verify whether anything concrete has been accomplished at the end of those five days.

In five days, either Trump will announce “extraordinary progress”—without any details—or he’ll renew the threat of strikes. In either case, the markets will fluctuate wildly. In either case, someone will make money. And in either case, nothing will have fundamentally changed in the Middle East.

Chaos is not a glitch in the Trump system. It is its core feature.

Consumers — in theory

A drop in the price per barrel should, in theory, translate into lower prices at the pump. American, European, and Canadian drivers should benefit from this. In theory. In practice, refiners and retailers absorb part of the decline. Taxes remain fixed. And the time it takes for crude oil prices to be reflected at the pump ranges from two to eight weeks.

In other words, if oil prices rise again in five days—which is entirely possible—consumers will never have seen the difference.

U.S. producers—the real losers

American shale oil producers, on the other hand, are suffering immediately. Their average break-even point ranges from $50 to $65 per barrel, depending on the basin. Brent crude below $65 puts dozens of small producers in the danger zone. Investments in new drilling projects are being postponed. Jobs in the Permian Basin, Eagle Ford, and Bakken are becoming precarious.

Trump, who presents himself as the champion of the U.S. oil industry, has just dealt it a blow with a single adjective.

Beijing Is Buying Iranian Oil — and Is No Longer Hiding It

While Washington negotiates with Tehran, Beijing continues to buy Iranian oil on a massive scale—in open violation of U.S. sanctions. Chinese “ghost refineries”—independent facilities known as teapot refineries—process between 1 and 1.5 million barrels per day of Iranian crude. The money flows through opaque banking channels, cryptocurrencies, and intermediaries in Dubai and Singapore.

An agreement between Washington and Tehran that would lift sanctions on Iranian oil would legitimize what China is already doing behind the scenes. Beijing would no longer have to pay a risk premium on this crude. The Iranian discount—currently $10 to $15 below Brent—would disappear. And China would save billions.

The Washington-Tehran-Beijing Triangle

This is the triangle that no one draws on television talk shows. Trump is negotiating with Iran, but the real player missing from the table is China. Any agreement that increases Iranian supply on the global market drives prices down—which benefits China, the world’s leading oil importer. And it weakens Russia, whose budget depends on oil prices of at least $70 per barrel.

Weakening Russia by driving down oil prices through a deal with Iran, while giving China exactly what it wants? That’s either strategic genius or monumental incompetence. And the line between the two has never been so thin.

Moscow Bleeds with Every Dollar Lost Per Barrel

The Russian federal budget is based on the assumption of a $70-per-barrel price. Every dollar below that threshold widens the deficit. And Russia, already strangled by Western sanctions linked to the war in Ukraine, no longer has the fiscal leeway it once did. The National Welfare Fund—the Kremlin’s financial safety net—is melting away like snow in the sun.

If oil prices remain below $65 for an extended period, Moscow would be forced to make impossible choices: cut military spending in the midst of a war, or slash social transfers that buy domestic peace.

The Moscow-Tehran Alliance Is Weakened

Iran and Russia are allies of convenience. Tehran supplies Shahed drones to Moscow for the war in Ukraine. Moscow supports Tehran in the UN Security Council. But if Iran reaches an agreement with Washington that lifts oil sanctions, this alliance will lose its foundation.

An Iran reintegrated into the global economic system no longer needs Russia as a diplomatic shield. And a Russia facing cheap oil can no longer afford to buy Iranian drones at a premium. The irony is biting: Trump could weaken the Russian-Iranian alliance not by force, but with a single phone call.

Scenario 1: The Show-and-Tell Deal

Trump announces a “historic deal” with Iran. The details are vague. The terms are nonbinding. Nothing has been formally signed. But the photo looks good, the tweet goes viral, and oil prices remain low. Probability: 35%.

Scenario 2: Renewed Escalation

The “talks” fail. Trump puts the threat of strikes back on the table. Oil prices spike sharply. The markets panic in the opposite direction. And we’re back exactly where we started, having wasted five days. Probability: 25%.

Scenario 3: Indefinite Postponement

Trump postpones again. Five days become ten. Then thirty. The threat remains hanging in the air—never carried out, never lifted. The market gets used to it. The “risk premium” slowly melts away. Iran continues to enrich uranium without consequence. Probability: 20%.

Scenario 4: The Resurrected Nuclear Deal

The talks lead to a genuine framework for nuclear negotiations—a 2.0 version of the JCPOA that Trump himself had torn up in 2018. This would be the most spectacular turnaround of his diplomatic career. Probability: 10%.

Scenario 5: The Unforeseen Event

A Houthi drone strikes a Saudi tanker. Israel strikes an Iranian nuclear site. A terrorist attack upends the situation. Everything mentioned above becomes irrelevant in an instant. Because the Middle East always has the final say. Probability: 10%.

Peace in the Middle East cannot be decreed via a tweet

There is something obscene about the way financial markets treat war and peace as quarterly adjustment variables. Men, women, and children are dying in Gaza, Lebanon, Yemen, and Syria. Cities are being razed to the ground. Entire populations are being displaced. And in New York, London, and Singapore, traders are adjusting their Brent oil positions based on the tone of a presidential tweet.

“Resolving the war in the Middle East” would require simultaneously resolving the Israeli-Palestinian conflict, Iran’s nuclear program, the Yemeni civil war, the collapse of Syria, and the influence of pro-Iranian militias in Iraq and Lebanon. No U.S. president has ever succeeded in tackling even a single one of these challenges. Trump claims he can resolve them all with a single phone call.

The Real Signal Amid the Noise

The real signal isn’t in the drop in oil prices. The real signal is in the volatility itself. Markets that fluctuate by several dollars per barrel based on a single presidential remark are sick markets. Markets that can no longer distinguish a bluff from actual policy. Markets that have accepted chaos as the new normal.

And when chaos becomes permanent, it’s always the most vulnerable who foot the bill.

Saudi Arabia Caught in the Crossfire

The Saudi kingdom had already announced gradual increases in production to regain market share. A U.S.-Iran deal that would bring 1.5 million Iranian barrels back onto the official market would create a massive surplus. Riyadh would have to choose: cut its own production to prop up prices—and lose market share—or maintain production and accept a price below $60 per barrel.

Mohammed bin Salman needs oil prices to be at least $80 per barrel to finance Vision 2030, his ambitious plan for economic transformation. Every dollar below that threshold delays NEOM, delays Aramco’s initial public offering, and delays the future he has promised his people.

The Coming Market-Share War

If Iran returns fully to the market, OPEC+’s fragile discipline will shatter. Iraq will want to produce more. So will Kazakhstan. So will the UAE. And Saudi Arabia will be tempted to flood the market to crush U.S. shale producers—just as it did in 2014–2016.

This scenario has a name: the oil price war. And the last time it happened, it triggered a wave of bankruptcies in the Permian Basin, recessions in Nigeria and Venezuela, and drastic budget cuts in Russia.

Producers That Won’t Survive at $60

The U.S. shale industry has consolidated since 2020. The majors—ExxonMobil, Chevron, ConocoPhillips—have acquired smaller producers. Costs have been optimized. But a sustained price below $60 per barrel would kill exploration for new wells. DUCs—drilled but uncompleted wells—would be frozen. And oilfield services companies, from Halliburton to Schlumberger, would see their order books shrink.

By driving down oil prices, Trump is jeopardizing the jobs and incomes of his own voters in Texas, North Dakota, Oklahoma, and New Mexico—the very states that brought him to power.

The Paradox of Energy Independence

The United States produces about 13 million barrels per day—an all-time high. This production relies on a price per barrel high enough to justify the investments. If Trump drives prices down by bringing Iran back into the global market, he undermines the very foundations of American energy independence that he touts in every speech.

This is the fundamental paradox that no one in the White House seems to understand—or wants to understand: you cannot simultaneously maximize U.S. production AND minimize the price per barrel. The laws of economics do not bend to tweets.

Netanyahu Doesn’t Want a Deal with Iran

Benjamin Netanyahu has spent three decades warning the world about the Iranian nuclear threat. He sabotaged the JCPOA behind the scenes. He sent the Mossad to steal Iranian nuclear archives in Tehran. He ordered the assassinations of nuclear scientists. The idea that Israel would passively accept a U.S.-Iran deal is pure fiction.

If the talks actually make progress, Israel has both the means and the motivation to sabotage them. A “preemptive” strike on an Iranian nuclear site. A targeted assassination. An intelligence operation that leaks compromising information. The Mossad has already done all of this. It can do it again.

The Israeli Political Calendar

Netanyahu is facing legal proceedings, internal protests, and a fragile governing coalition. An external enemy is his political lifeline. An Iran reconciled with the West would be a catastrophe for his political survival. And a politician backed into a corner is a dangerous politician.

The greatest risk over the next five days is not that the talks will fail. It is that someone will decide they must not succeed.

The JCPOA: An Analysis of a Dead Agreement

In 2015, Obama signed the Joint Comprehensive Plan of Action with Iran. The agreement limited Iran’s nuclear enrichment in exchange for a gradual lifting of sanctions. It was working. IAEA inspectors confirmed Iran’s compliance. Iranian oil was returning to the market. Prices were falling.

Then Trump tore up the agreement in 2018. Unilaterally. Without an alternative. Sanctions were reimposed. Iran restarted its nuclear program, more aggressively than before the agreement. And seven years later, here we are: the same man who destroyed the agreement is now claiming to be negotiating a new one.

The Law of Diminishing Diplomatic Returns

Each cycle of threats, negotiations, and failure erodes U.S. credibility. The Iranians have learned that agreements with Washington do not survive a change in administration. The Europeans have learned that U.S. guarantees are reversible. The markets have learned that the president’s words are tools of manipulation, not commitments.

And in this climate of universal mistrust, a word like “productive” is worth exactly nothing.

The Taboo Question

Here’s the question I’m asking—and one that analysts at Bloomberg, Reuters, and CNBC are carefully avoiding: Who exactly benefits from this situation? Not consumers—they won’t see lower prices at the pump. Not U.S. producers—they’re suffering immediately. Not stability in the Middle East—nothing has changed on the ground.

It benefits those who knew before anyone else that the word “productive” would be uttered. It benefits those who had short positions in oil before the announcement. It benefits those who understand that in Trump’s world, information is not a public good—it’s a private weapon.

What Will Actually Happen

In five days, nothing will have fundamentally changed. Iran will continue to enrich uranium. The Houthis will continue to fire on ships. Gaza will remain in ruins. Oil prices will rise again at the next bellicose statement. And the same analysts who are celebrating “de-escalation” today will be panicking over “escalation” tomorrow.

The Middle East is not a futures market. It is a graveyard of broken promises.

And the word “productive,” coming from Donald Trump, is the most hollow of all.

Signed, Jacques PJ Provost