WTI moves past $100 for first time since May as markets bet on a long war

As traders increasingly anticipate a drawn-out US-Iran conflict, crude prices are spiking. The likelihood of a resolution before November is fading. In remarks delivered yesterday, Trump said he expects the conflict with Iran to finish right after the US midterm elections in November, an effective acknowledgment that hostilities are likely to persist at least until then.

This is prompting a rethink among traders who had earlier bet on a quicker resolution. According to reports, Trump's senior advisers are planning for a conflict that could extend well past November, underscoring the lack of a clear exit strategy.

Brent has moved decisively past the $100-a-barrel mark, climbing to roughly $105, and WTI is hovering near $100. The advance points to a market now pricing in a more extended stretch of tight supply.

So when the war might finally end has become a major influence on oil. Should market participants keep shifting the anticipated resolution out further, the risk premium built into crude values will rise. That bodes ill for risk assets and bonds, as the yield on the US 10-year Treasury nears a fresh cyclical peak (explained here).