Despite the G7 nations’ decision to release strategic oil reserves, crude oil prices have risen. This is because the reduction in crude oil supply caused by the blockade of the Strait is far greater; in fact, the release of reserves has only served to highlight the true scale of the problem. President Trump has been swinging between statements that he views this war in four-week increments and others suggesting an imminent end, with his remarks shifting to the exact opposite almost daily, leaving the market in turmoil.

Just the other day, he made remarks suggesting the conflict could drag on. It seems there was no real strategy to begin with—he was simply being manipulated by Israel. He was panicked by the fact that gasoline prices in the U.S. had started to rise. If things continue this way, he will lose the midterm elections. The market, judging that the U.S. military is likely to pull out, reacted with a risk-on sentiment. Amid this, the euro-dollar pair broke below the psychologically important support level of 1.1500.

Since the start of the year, there has been active movement to diversify away from dollar investments, causing the pair to temporarily break through 1.20 and reach 1.2080.
Just when it seemed 2026 would be a year of dollar weakness, attacks on Iran began. The resulting surge in commodity prices was interpreted as favorable for the U.S. economy and unfavorable for Europe, causing the dollar to rebound and eventually break below 1.1500. As for what happens next, only Iran can decide how long the blockade of the Strait of Hormuz—the focal point of the situation—will continue; the U.S. and Israel have completely lost control.

I wondered if U.S. military power could protect the Gulf states, but oil facilities and water purification plants are being easily destroyed. Tankers in the Gulf are also being attacked without much resistance. The initiative in the war has shifted to Iran, and the longer the blockade continues, the higher crude oil prices will soar. If that happens, the U.S., as the largest crude oil producer, will find itself in a relatively advantageous position, forcing it to reverse its previous strategy of diversified investment.

Although the surge in resource prices was brought about by failures in U.S. politics, it is the U.S. that stands to benefit, while Europe and Japan are forced into a difficult position. Since commodity prices will be higher than before the war, the Australian dollar is likely to be favored by process of elimination. A price of $150 per barrel has become a realistic possibility. Unless the Bank of Japan makes a dramatic policy shift, the yen’s depreciation is likely to continue.

Risk assets will rebound. The situation does not appear likely to be resolved easily, so I want to look for upside potential for the dollar against the euro and the yen. Should we look to buy the dollar against the yen and other yen crosses on dips? In the medium to long term, the market will likely operate on the assumption that the war will end. However, this could change in the blink of an eye depending on the war situation. We should also pay close attention to the moves of Ayatollah Khamenei, who has recently become Iran’s Supreme Leader.