What is the TACO trade and are investors profiting amid war on Iran?

twitterwhatsappcopylinkgoogleAdd Al Jazeera on GoogleinfoShown are petrol prices at a filling station in Philadelphia, Pennsylvania, the US [File: Matt Rourke/AP Photo]By Al Jazeera StaffPublished On 27 Mar 202627 Mar 2026The whirlwind of uncertainty in the oil markets has continued this week as the United States-Israel war on Iran approaches the one-month mark.

The Strait of Hormuz remains effectively closed, and the impact of the global energy crisis is broadening. From Asia to Europe and beyond, the economic outlook is darkening.

On Wednesday, Japan began its biggest release of national oil reserves – some 80 million barrels will be given to refiners, enough for 45 days. The country imports 90 percent of its crude oil from the Middle East.

On Thursday, the Organisation for Economic Co-operation and Development (OECD) warned the conflict would damage the United Kingdom more than any other major economy, predicting that inflation would hit 4 percent this year.

Speaking at a meeting of G7 foreign ministers in France, UK Foreign Secretary Yvette Cooper said Iran cannot be allowed to hold the global economy hostage.

Amid the uncertainty, further turmoil has been created by Donald Trump’s messaging, which has not always been consistent.

In one of the most recent examples, at the start of the trading week on Monday, there were less than 12 hours remaining on Trump’s original 48-hour deadline for Iran to reopen the Strait of Hormuz.

But just before the period expired, he extended the deadline by five days, and later promised to hold off from attacks on Iran’s energy facilities for an additional 10 days to allow for further “constructive conversations”.

Observers say this type of about-face, which Trump repeatedly made over the past year amid his threats to impose steep tariffs on countries around the world, has opened the door to investors willing to bet that the US president will back down.

The phenomenon has earned the acronym TACO: Trump Always Chickens Out.

On Monday, oil markets rallied following the first extension of Trump’s deadline from 48 hours to five days.

Then, when Trump on Thursday extended his deadline for Iran to reopen the Strait of Hormuz until April 6, stock prices rebounded even further – and those investors who had bought in profited.

However, Lena Komileva, chief economist at consultancy firm (g+)economics, said global markets have been less inclined to rebound after Trump’s Iran-related policy reversals than they did with similar shifts in response to the US president’s tariff policies.

“That is because, of course, we have more players here,” Komileva told Al Jazeera. “That there are parties to the conflict with very unique and complex objectives means that the US cannot unilaterally retreat on its point.”