Market Highlights and Key Data

1. According to a report from Axios on the evening of May 19 local time, U.S. President Donald Trump convened his national security team on May 18 to receive briefings on potential military action plans against Iran. Citing two U.S. officials, the report stated the meeting focused on the next steps regarding the Iran conflict, diplomatic negotiations, and possible U.S. military moves. The briefing reportedly indicated Trump is "seriously considering resuming military action against Iran." Sources familiar with the matter suggested that some officials advocating a tough stance believe Trump currently "has a mood to deliver a strong blow to force Iran to make concessions in negotiations."

2. President Trump stated on Tuesday that the U.S. may need to take military action against Iran again, revealing that he was within an hour of ordering an attack before he postponed it. Speaking to reporters at the White House, Trump said, "I was an hour away from ordering the attack today." He added that Iranian leadership is pleading for a deal, but if an agreement cannot be reached, the U.S. will launch another attack within the coming days. Trump noted, "I mean, it would probably take two or three days, maybe Friday, Saturday, Sunday, or early next week. It won't be long because we can't let them have a new nuclear weapon."

3. U.S. Treasury Secretary Steven Mnuchin called on allies on Tuesday to intensify efforts to combat Iran's financial networks. He stated the Treasury would remove outdated designations from sanctions lists to make it easier for financial institutions to identify complex terrorism financing schemes. Speaking after a meeting of G7 finance leaders in Paris, Mnuchin said participants needed to "stand with us fully" in firm opposition to Iran. Mnuchin emphasized, "This will require, for example, our European partners to act with the United States against Iran, including designating Iran's financiers, exposing its shell and front companies, closing its bank branches, and dismantling its proxies. It will also require countries in the Middle East and Asia to help completely eradicate Iran's shadow banking networks."

Investment Rationale

As hopes for a negotiated resolution to Middle East issues dwindle, the U.S. is contemplating a new round of military strikes against Iran. Energy infrastructure in the region could become targets, creating upside risks for oil prices.

Strategy

Oil prices are expected to maintain high volatility in the short term due to geopolitical tensions. Current participation in the crude oil market carries elevated risks. It is advisable to utilize options instruments to hedge against these risks.

Risks

Downside Risks: De-escalation of conflict in the Middle East, reopening of the Strait of Hormuz, a global economic crisis triggered by an energy crisis. Upside Risks: Closure of the Strait of Hormuz exceeding expectations.