Seven months into the US-Iran conflict, the crude oil market's sensitivity to Trump's statements has fallen sharply, with traders shifting their attention from White House pronouncements to physical cargo flows and other supply indicators.

As the conflict drags on, the impact of each round of Trump's remarks on oil prices has continued to diminish. On October 1, Trump warned that Iran would "cease to exist" if it did not sign a ceasefire agreement, yet oil prices barely moved — whereas on April 1, when he issued a similar threat, Brent crude surged more than 7% in a single day, closing above $109 per barrel. This contrast starkly reveals a fundamental shift in market sentiment.

The ebbing of market sentiment is reshaping trading behavior. According to multiple crude oil traders interviewed by Bloomberg, they are reducing position sizes and concentrating their efforts on quantifiable physical supply signals such as freight data, rather than White House diplomatic or military statements. Open interest in Brent crude futures has fallen to its lowest level since March 2025, and intraday price ranges have narrowed significantly compared to the early days of the war.

Diminishing impact of rhetoric as market gradually becomes desensitized

In the early days of the conflict, every word from Trump gripped the oil market. Traders closely tracked his statements, trying to gauge the direction of the war — especially whether the "worst-case scenario" of a Strait of Hormuz blockade would materialize. At that time, shipping nearly ground to a halt, global energy markets were in violent turmoil, and oil prices were extremely responsive to the president's remarks.

Seven months later, however, that sensitivity has clearly dulled. According to Bloomberg's analysis of intraday price movements, the impact of Trump's statements on daily Brent crude price changes has continued to narrow. John Kilduff, a partner at Again Capital, described the current situation as "headline news bombarding us for months," noting: "It's basically geopolitical roulette now, and everyone I talk to is shrinking their trading size."

Rob Thummel, senior portfolio manager at Tortoise Capital Advisors LLC, said: "The back-and-forth signals from the White House have left traders paralyzed." Michael O'Rourke, chief market strategist at JonesTrading Institutional Services LLC, also pointed out that "the president says a lot of things, and his positions change quite frequently. After several rounds of headlines, the market does become numb."

Repeated reversals erode credibility, leaving analysts unable to model outcomes

The decline in the credibility of Trump's statements is closely tied to his frequent reversals on the Iran issue.

Over the past seven months, he repeatedly hinted at progress in diplomatic negotiations or an imminent deal, only to quickly change course; he also floated the idea of charging fees on vessels transiting the Strait of Hormuz, only to abandon it within a day. This constant back-and-forth has led traders to broadly conclude that his statements are no longer a reliable basis for gauging oil price direction.

Even professional analysts admit they struggle to build effective models for the war's trajectory. JPMorgan analysts wrote in a recent report: "We simply don't know how to model the endgame. At the start of the war, we thought we did."

Focus shifts to physical flows as liquidity risks emerge

With rhetoric-driven volatility fading, traders' eyes have turned to more actionable physical supply data. Michael O'Rourke said, "Physical flow data is real-time and actionable, and market attention on it has clearly risen."

However, this shift also brings new market risks. As traditional investors step back to the sidelines, the influence of algorithmic trading has relatively increased. These momentum-driven commodity trading advisor (CTA) strategies tend to amplify price swings in two-way markets and can cause short-term dislocations between physical and paper markets.

At the same time, open interest in Brent crude futures has dropped to a near-one-and-a-half-year low, and the contraction in market liquidity itself poses a potential hazard. Given that oil price movements are deeply embedded in global inflation expectations, declining visibility in the crude oil market will further cloud judgments about interest rate policy paths and the global economic outlook.

Fundamental shocks persist, but the market has learned to "separate signals"

Although the market's reaction to Trump's statements has grown muted, the conflict's substantive impact on energy markets should not be underestimated. The US-Iran war, combined with Ukraine's strikes on Russian refining facilities, has pushed retail fuel prices to historic highs in many parts of the world, with central bank officials in Europe and elsewhere voicing concerns about stubborn inflation driven by surging energy costs.

Most traders also acknowledge that Trump's statements cannot be entirely ignored — as the ultimate decision-maker on military deployments and the war's direction, his every move still carries fundamental influence. But at this stage, speculative capital is broadly choosing to hold steady unless channels outside the White House can provide clearer directional signals. The market's logic has quietly shifted: words are no longer the anchor — cargo flows are.