Trump blasted Obama’s Iran deal. Now he faces similar tradeoffs.

The market is underpricing the asymmetry between near-term de-escalation optics and medium-term re-risking. Even if a deal or partial easing emerges, the first-order trade is not “peace premium” so much as a redistribution of bargaining power: Iranian state-linked cash flow gets repaired faster than the underlying sanctions architecture can be unwound, which extends the regime’s optionality on regional proxies. That creates a more persistent threat to shipping lanes, Gulf risk premia, and any asset dependent on stable Strait of Hormuz throughput.

The bigger second-order effect is on inflation duration, not just headline oil. A softer Iran policy path may cap the upside in crude for a few weeks, but it also raises the probability of a stop-start sanctions regime that keeps forward curves backwardated and inventory management tight. That is bearish for refiners and transport at the margin, but constructive for upstream operators with low decline rates and for defense/homeland security suppliers if proxy activity resumes after the diplomatic window closes.

Consensus appears too focused on whether relief happens and not enough on how temporary any relief is likely to be. The real catalyst risk sits in the 1-6 month window: talks can suppress risk premium, then fail on enrichment verification or enforcement, triggering a sharper repricing because positioning will likely be crowded into the “diplomacy works” trade. Over 12-24 months, the expiration problem means any agreement can morph into a deferred conflict, which is usually worse for risk assets than an immediate stalemate because it encourages capital misallocation and complacency before the next shock.