Sometimes you realize that institutions can be pretty slow to react. Back in mid-August, we were already talking about the clear trend of the 'prolonged U.S.-Iran conflict,' but it’s only recently that institutions are catching on to the 'normalization' of disruptions in the Strait of Hormuz. Yesterday, before boarding Air Force One at Andrews Air Force Base to head to Dallas for a Republican midterm election rally, Trump spoke to the media and said: 1) He thinks the drop in oil prices will take longer than the midterm elections, meaning he expects the conflict with Iran to drag on until after the U.S. midterms in November; 2) He’s also aware that Iran’s current actions are aimed at escalating tensions and driving up oil prices to influence the outcome of the midterm elections. As we’ve discussed many times before, this isn’t something Trump can simply resolve with a TACO (Temporary Agreement to Calm Oil). In yesterday’s tweet, I listed four different levels of concessions Trump could make. At least the third level would be needed for a TACO to have any real effect. If he only achieves the first or second level, it might ease market concerns in the short term, but it won’t solve the underlying issue. Iran will continue to sporadically attack oil tankers because that’s their 'card,' and cards need to be played occasionally to maintain their power. But if Trump goes that far, he’ll face massive political pressure domestically, with Democrats attacking him relentlessly. Here’s one possible scenario I thought of: As the midterm elections approach, Iran might also make some concessions, as we discussed last week: Before the midterms, Trump is under heavy pressure; After the midterms, Iran will face greater pressure (because regardless of the election outcome, Trump will have fewer political concerns and at least two more years to deal with Iran. Long-term, high-intensity sanctions and blockades will be hard for Iran to endure). The best-case scenario would be around mid-October, before the midterms, when Trump is worn down and Iran realizes that delaying until after the elections will only increase their pressure. At that point, both sides might make some concessions and come up with a compromise plan that allows them to give their domestic audiences a decent explanation. Of course, this is just speculation—we’ll have to wait and see how things unfold. Last week, we talked about this: the signs of 'prolonged blockades, navigation disputes, diplomatic back-and-forth, and intermittent market shocks' seem more realistic as the current baseline than 'quick and comprehensive reconciliation.' https://(x.com)/qinbafrank/status/2096484502327714088?s=46&t=k6rimWsEbo2D2tXolYcM-A