Trump teased an Iran deal that didn't come, but markets soared. Here’s why it keeps happening

The Trump administration's recent optimism about a potential Iran deal, despite no deal being finalized, led to a surge in stock prices and a decrease in oil prices. This pattern is not new, as Trump has repeatedly claimed to be close to an agreement that would end the ongoing war with Iran. However, this purported deal seems to be a source of optimistic bias in the market, according to Helima Croft, a global head of commodity strategy at RBC Capital Markets.

Critics argue that investors often view such deals as a "time machine" that will return the Middle East to its prewar state, which is highly unlikely. The conflict primarily revolves around the Strait of Hormuz, a crucial oil trade route that Iran has effectively restricted, causing global energy supply shocks, inflation, and increased oil prices.

Both Iran and the U.S. have conflicting positions on the strait's future; Iran seeks a service fee, while the U.S. aims to restore pre-war conditions. Treasury Secretary Scott Bessent expressed optimism about a possible deal, but crude prices remain high due to investors' anticipation of a comprehensive solution and potential military escalation.

The administration's announcements of progress, such as Trump's claim of a deal being agreed to, have further fueled investor optimism and caused the Dow Jones Industrial Average to reach record highs. Despite Iran's insistence that they are in talks with Oman, not the U.S., the administration continues to claim ongoing negotiations and control of the strait.

On Thursday, expectations of an imminent deal were temporarily thwarted by a report suggesting Iran had drafted a plan to block U.S. and Israeli ships from the strait, which the U.S. quickly dismissed. Trump's latest comments suggest the situation remains fluid, with the possibility of a deal emerging soon.