The price of WTI has surpassed 105 dollars. Historical data shows that after nearly breaking this price in the first half of the year, the United States and Iran will enter negotiations. Therefore, many people believe that the possibility of Trump TACO-ing is higher. So what can Trump TACO?

I calculated a bit and there are roughly five things, but all five would slap Trump in the face:

1. Withdraw U.S. troops from Iran, which means unblocking Iranian ports. However, unblocking Iranian ports does not necessarily mean Iran will unblock Hormuz. If Iran still does not unblock, it would mean that the U.S. suffers unilaterally, while Iran can resume importing and exporting oil.

2. The U.S. lifts economic sanctions on Iran. This is aimed at further cutting Iran's financial, trade, and energy revenues, especially since sanctions are continuing to expand in September.

3. Unfreeze Iran's frozen overseas assets. This might be the simplest and least pressured thing for Trump, although it would still be a slap in the face, it would be much lighter compared to the others.

4. Compensate Iran for war damages or release reconstruction funds. This could be the most difficult to digest. Iran has now publicly included compensation as one of the conditions for reopening Hormuz. No matter how it goes this time, it is undoubtedly war reparations.

5. Stop the war and accept Iran's proposal for controlling Hormuz traffic. In plain language, it means accepting Iran's toll on Hormuz, which would also be a loud slap in the face, given that Trump has repeatedly stated that there could be no toll for Hormuz.

Therefore, although I am shorting oil, I feel that the probability of getting Trump to TACO is still somewhat low. Instead, including pressure from China on Iran to open some Hormuz routes has slightly more possibility, as it is indeed increasing inflation for Iran-friendly countries, including China.

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