Two-Week Pause in Iran War: Inverse Energy ETFs for Quick Gains

President Donald Trump, on April 7, 2026, said he would suspend planned attacks on Iranian infrastructure for two weeks, stepping back from earlier threats of imminent large-scale strikes on Iran’s “whole civilization,” as quoted on CNBC.

The decision came more than a month after the United States and Israel launched the attack on Iran.The decision was “based on conversations with Prime Minister Shehbaz Sharif and Field Marshal Asim Munir, of Pakistan,” Trump wrote, as mentioned in CNBC.

Ceasefire Linked to Strait of Hormuz Opening

Trump said the pause is dependent on Iran agreeing to the “complete, immediate, and safe” reopening of the Strait of Hormuz, a critical route for global oil shipments. “This will be a double-sided ceasefire,” he wrote on Truth Social. Iranian Foreign Minister Abbas Araghchi said vessels would be allowed safe passage through the strait during the two-week period, subject to coordination with Iran’s armed forces and technical considerations.

Negotiations to Begin in Islamabad

Talks between the United States and Iran are set to take place in Islamabad over the next two weeks. Iran’s proposal reportedly includes U.S. troop withdrawals from regional bases, sanctions relief, release of frozen assets, war compensation, and a structured framework for transit through the Strait of Hormuz, as quoted on CNBC.

Slump in Oil Prices

Oil prices dropped on April 7, 2026, after President Trump paused a broad bombing campaign on Iran. Futures on Brent crude plunged more than 16% to trade as low as $90.78 a barrel. Futures on the West Texas Intermediate (WTI) crude also slumped 16% to trade just above $94 on Tuesday night, as quoted on Yahoo Finance.

ETFs to Gain

Against this backdrop, energy-related inverse exchange-traded funds (ETFs) could be tapped for quick gains.

MicroSectors U.S. Big Oil -3 Inverse Leveraged ETN NRGD – down 28.9% past month; up 9.9% past week

MicroSectors Energy 3X Inverse Leveraged ETN WTID – down 23.7% past month; up 9.1% past week

Direxion Daily Energy Bear 2X ETF ERY – down 14.3% past month; up 6.4% past week

Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 2X ETF DRIP – down 21.4% past month; up 5.5% past week

ProShares UltraShort Energy DUG – down 14.1% past month; up 5.7% past week

Any Caveat?

These funds run the risk of huge losses compared to traditional funds in fluctuating or seesawing markets. Further, their performance could vary significantly from the actual performance of their underlying index over a longer period when compared to a shorter period (such as weeks or months).

Investors should note that these products are suitable only for short-term traders, as they are rebalanced on a daily basis. Further, liquidity can be a big problem as it can make the products more expensive than they appear.

Moreover, the trajectory of oil prices from here hinges on how much physical damage happens to the energy infrastructure. According to Rystad Energy’s estimates, energy infrastructure repair and restoration costs could be at least $25 billion, based on an initial assessment of impacted facilities. Hence, over the medium term, oil prices are unlikely to return to the pre-war low levels.

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This article originally published on Zacks Investment Research (zacks.com).

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