Trump teased an Iran deal that didn't come, but markets soared. Here’s why it keeps happening

This week, the Trump administration sparked enthusiasm that the U.S. and Iran could soon strike a deal on the Strait of Hormuz, driving down oil prices and sending stocks soaring — only for no deal to emerge:

If that sounds familiar, it may be because President Donald Trump has claimed dozens of times that the U.S. is close to an agreement that will end the war it began more than five months ago:

Investors have reacted to many of those claims with bursts of buying on hopes a breakthrough is near, even as the war instead appears to be widening and progress on Trump's chief stated goal — containing Iran's nuclear ambitions — is at a standstill:

"There's tremendous optimism bias in the market," Helima Croft, global head of commodity strategy at RBC Capital Markets, told CNBC:

Markets continue to assume incentives for both the U.S. and Iran favor a diplomatic end to the war. But some investors seem to "see a deal as a time machine" that will reset the Middle East to its prewar status quo, even though that's unlikely to happen:

The conflict of late centers on the Strait of Hormuz, a vital passageway for the global oil trade that has become a source of major leverage for Iran:

Tehran's ability to effectively close the strait — an open, untolled international waterway before the war started — triggered a global energy supply shock that drove up gas prices, exacerbated inflation, and raised alarms about oil reserves:

"The President's preference is always diplomacy, but he reserves all options to ensure that Iran can never possess a nuclear weapon," White House spokesperson Anna Kelly told CNBC by email:

Even those who believe diplomacy remains a viable path to peace acknowledge the future of the strait presents an intractable problem:

"There still appears to be a fundamental difference over the fate of Hormuz: Iran wants to impose a service fee, while the U.S. wants the pre-war situation restored, i.e., international, free waters in the Strait," Claudio Galimberti, partner and chief economist at Rystad Energy, said by email:

Bessent, Trump teased imminent deal

The oil market is eager for any hint of progress toward reopening the strait. Treasury Secretary Scott Bessent provided a major dose of optimism Tuesday morning when he told CNBC's "Squawk Box" that a deal to ensure "freedom of movement" in the strait could come in a matter of hours:

"We are in talks with the Iranians," Bessent said. "There is a chance we may have a deal today or tomorrow to open the strait and move towards a more normalized position in this conflict:"

watch nowVIDEO5:0405:04Treasury Secretary Bessent: We may have a deal today or tomorrow to open the Strait of HormuzSquawk Box

Bessent's comments to CNBC nevertheless buoyed outlooks that were already brightening, in light of Trump's Sunday evening announcement that he was aborting a large-scale attack on Iran because "the perimeters of a deal has been agreed to:"

That claim — which echoed myriad other times that Trump has threatened to decisively obliterate Iran, only to pull back — helped pump stocks on Monday, when the Dow Jones Industrial Average surged to a record close:

Trump added more fuel to the fire Tuesday night, when he said a deal to reopen the strait "could happen" as soon as Wednesday or Thursday because "a lot of progress has been made:"

Despite extending Bessent's time frame for a possible deal, Trump's comments continued to raise investors' expectations on Wednesday, with the Dow hitting another record-high close and oil prices holding steady:

Iran pushes back on Trump

The galloping momentum in equities came in spite of Iran's repeated insistence that it is not actively negotiating with the U.S:

Rather, Iran has said it's in talks with Oman, another regional power that borders the Persian Gulf, to hash out their own agreement on shipping through the strait:

Trump has angrily asserted that U.S.-Iran talks are ongoing despite Iran's "duplicitous" claims otherwise:

On Thursday, any expectations of an imminent deal on the strait appeared to be at least temporarily dashed, after Iranian state media reported a draft plan that would block passage for U.S. and Israeli ships and impose other restrictions:

The Trump administration quickly appeared to dismiss that draft as a nonstarter: