Trump TACOed, can the market be reassured? UBS: Navigation through the Strait of Hormuz is the key.
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On the same day, Brent crude oil hit $120 per barrel and then fell back to $90—a record single-day price swing, triggered by nothing more than a single comment from Trump. However, UBS issued a warning: even if there are signs of political de-escalation, whether actual oil shipments through the Strait of Hormuz can recover is the real watershed for the oil market's next move.
According to CCTV News, on March 9 Eastern Time, Trump publicly stated that the US-Iran conflict was “nearly over” and “ahead of schedule,” which the market interpreted as a potential ceasefire signal. Crude prices quickly plunged: US oil dropped over 31% from the day’s high and fell 7% from last Friday’s close; Brent crude dropped 4.67%.
UBS characterized Trump’s statement as “a possible first sign of potential de-escalation,” using cautious wording. Their research report also listed major ongoing uncertainties:
When the US and Israel will actually halt their strikes on Iran;
Whether Iran will also stop its regional strikes and stop threatening shipping through the Strait of Hormuz.
In other words, Trump’s “TACO” signal does not mean the crisis is resolved. Only if the two conditions above are fulfilled in the coming days will the situation truly approach the baseline scenario set in UBS's earlier oil price update report.
In the baseline scenario, UBS forecasts Brent crude will fall back to the $70 per barrel range by the second quarter of 2026. However, there is currently one key variable running beyond the model's assumptions.
Argus data shows that as of March 9, the actual production reduction was between 6.2 and 6.9 million barrels per day, while UBS’s model baseline was about 3 million barrels per day in March—meaning the real value is nearly twice the forecast.
UBS pointed out explicitly in their report that the actual degree of output reduction may be slightly greater than the baseline scenario, which could keep oil prices at a slightly higher level for a longer period. In other words, even if the situation tends toward de-escalation, the pace and magnitude of oil price declines may not be as smooth as previously expected.
However, UBS notes that several major variables still exist: when the US and Israel will halt strikes, whether Iran will simultaneously stop regional offensives, and whether the Hormuz shipping threat can be lifted. If the situation effectively de-escalates in a few days, approaching last week’s UBS baseline—Brent could fall to the $70 range by Q2 2026.
According to UBS’s “Hormuz Shipping Tracker,” about 50 oil and gas tankers passed through the Strait of Hormuz daily in February, but that number has now plummeted to just 1 or 2 ships.
“No matter how the conflict evolves, we believe that oil and gas shipments through the Strait of Hormuz will be the core data point most worthy of attention in the near term. The duration of any disruption and the pace of shipment recovery are both critical to the market direction.”
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