Brent crude futures tumbled from nearly $120/bbl early Monday morning to as low as $83/bbl by late Monday afternoon after President Trump said the Iran war could end soon. However, the contract had clawed back some losses and was trading around $91 to $95 Tuesday morning.

Trump's assertion that Operation Epic Fury may end "very soon" only reinforces renewed Trump Always Chickens Out (TACO) expectations. His TACO-like comments came hours after G-7 leaders spent Monday morning jawboning Brent crude prices with headlines.

We suspect Trump's "very soon" comment suggests the administration is searching for an exit strategy to the Iran conflict, given that the latest AAA data show the national average price for a gallon of regular gasoline has surged roughly 19% so far this month to $3.539 from $2.921, the largest monthly increase since May 2009.

...and is set to surge further in the next week or two (given the supply chain lags from crude to pump)...

UBS analyst Torsten Sippel told clients:

The recovery has been helped by easing crude prices, a lower VIX, and growing optimism around potential G-7 supply support or policy intervention. There are clear concerns about missing a rally that could follow even a modest geopolitical de-escalation, particularly given views that the oil market may already be pricing a worst-case scenario.

Crude has reversed sharply, down nearly $20 intraday after briefly approaching $120 overnight. The pullback reflects G-7 supply headlines, reports of tanker traffic moving through the Strait of Hormuz, and renewed "TACO" anticipation following comments from President Trump around a plan to address oil prices. Despite the volatility, no single dominant factor stands out today. Correlations were elevated in the morning, but dispersion is picking up this afternoon, pointing to more selective positioning. Overall, the tape feels orderly and headline-driven, with participants waiting for the next catalyst rather than aggressively de-risking.

Bloomberg quoted Graeme Miller, CFO at Melbourne-based Mercer Super, who said:

Trump saying the war is close to being over is being interpreted by many market participants as a sign the US is looking for some sort of off-ramp.

The truth is that none of us know how this will unfold, so there is no way to know whether the markets are pricing this correctly.

Central banks will be smart to get in front of an energy-driven inflation spike, but that comes with risks of slowing down the economy too much. It is very hard to be a central banker in this environment.

The Wall Street Journal reported earlier that Trump's advisers are urging him to find an off-ramp to the conflict amid fears of political backlash.

We suspect the gasoline price shock at the pump could be enough to sway some cash-strapped voters in the midterms, that's if prices stay high.