MW This is the real reason behind the U.S. dollar's climb as the Iran conflict drags on

By Christine Idzelis

The dollar is up so far this year

The U.S. dollar is up this year after climbing during the Iran conflict.

The U.S. dollar was trading nearly flat Monday afternoon, giving up earlier gains seen after talks between the U.S. and Iran over the weekend failed to reach a resolution to the conflict in the Middle East.

The buck has climbed since the start of the conflict, in keeping with its reputation as a global "safe haven" trade that typically does well during times of heightened geopolitical stress. But investors seeking safety from rising volatility doesn't tell the whole story behind the dollar's recent rise, according to Thierry Wizman, a currency and rates strategist at Macquarie.

In fact, the dollar's climb during the conflict may have more to do with rising oil prices than a "haven" bid, Wizman said in a note Monday. The ICE U.S. Dollar Index DXY, a measure of the greenback versus other major currencies, was edging down less than 0.1% Monday afternoon while oil prices climbed after President Donald Trump's decision over the weekend to blockade the Strait of Hormuz. The dollar is now up 0.3% year to date, FactSet data showed.

The higher correlation between the dollar index and the U.S. dollar spot price of Brent crude oil has been "a defining feature" of the commodity and currency market since the U.S.-Iran war started on Feb. 28, Wizman said, highlighting the chart below in his note.

MACQUARIE

The U.S. is energy independent, making it less vulnerable than other regions of the world to the disruption in the flow of oil and gas through the Strait of Hormuz amid the Iran conflict. Meanwhile, other nations that are energy importers need to buy more dollars and use them to pay these higher costs.

"In the context of the perceived shortage of crude oil, the U.S. and the dollar maintain their preferential positions vis-a-vis most other industrialized economies and their currencies given that the U.S. net energy balance is effectively zero," according to Wizman.

"We put much less faith in the 'flight to safety' imperative as a driver" of the greenback, considering the U.S. dollar "dropped precipitously" amid the global economic uncertainty that followed President Trump's announcement of his "liberation day" tariffs last April, Wizman added. "That's hardly how a 'haven' currency would react."

The ICE U.S. Dollar Index is up modestly in 2026 after rising during the Iran conflict, according to FactSet data, at last check on Monday.

Meanwhile, the U.S.'s blockade of the Strait of Hormuz probably means that the U.S. will "attempt to promote safe passage of vessels" by removing mines and providing naval escorts, according to Wizman. He expects the effort will likely also "block vessels that are carrying basic energy products from Iran, in order to deny the regime its revenues from crude-oil and natural-gas shipments."

Brent crude (BRN00), the global benchmark for oil prices, was up almost 5% Monday afternoon at around $100 a barrel, according to FactSet data, at last check. U.S. benchmark West Texas Intermediate crude (CL00) was rising 3% to around $99 a barrel in midday trading.

Brent has surged 64% so far this year, while WTI oil prices have soared around 73%, according to FactSet data, at last check.

Crude-oil prices might not "retreat in the short term unless the U.S.'s blockade succeeds in opening the strait to commercial traffic," said Wizman, while oil prices may not fall "in the medium term unless it forces Iran back to the negotiating table with concessions."

President Trump said in a social-media post Monday afternoon that "34 ships went through the Strait of Hormuz yesterday, which is by far the highest number since this foolish closure began." Oil prices appeared to ease their climb after that post.

On Saturday, Trump had posted on Truth Social that "massive numbers of completely empty oil tankers" were heading to the U.S. to "load up with the best and 'sweetest' oil (and gas!) anywhere in the World."

"We have more oil than the next two largest oil economies combined - and higher quality," Trump wrote in that same social-media post Saturday. "We are waiting for you."

-Christine Idzelis

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April 13, 2026 13:31 ET (17:31 GMT)

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