Iran Deal May Not Tame Oil Prices, Veteran Trader Warns of $135 Spike

The recent Iran-US deal has led to a drop in oil prices, but veteran trader Dan Dicker warns of a potential spike to $135 per barrel within a month. The agreement aims to keep the Strait of Hormuz open, and Vice President JD Vance announced several breakthroughs, including a mechanism to unfreeze Iranian assets. However, traders are pricing in a peace that has not fully arrived, as Trump threatened fresh strikes over the weekend.

Dicker believes that if inventories stay drained and supply fails to recover, the physical market will force a sharp repricing of oil prices. He notes that the Brent futures curve refuses to confirm the all-clear, with front-month Brent trading above the next month in backwardation, indicating tight supply.

The physical market sends a clear message: barrels are scarce. Prediction markets on Kalshi agree, with only about a 51% chance of normal Strait of Hormuz traffic returning by September. The cushion is thinning too, as the US emergency oil reserve fell to its lowest since 1983 last week.

Despite the recent drop in oil prices, traders are still paying funding fees to hold long positions on crypto venues like Hyperliquid, indicating a bearish bias. However, this market is relatively small, and a short squeeze could move the perp but not global Brent.