President Donald Trump has reportedly notified the United States Congress of a formal state of war with Iran, according to information from Politico. This notification aligns with heightened military actions following the collapse of a ceasefire in early July 2026, after a series of Iranian attacks on commercial vessels in the Strait of Hormuz. However, the ongoing conflict, known as Operation Epic Fury, originally commenced in February 2026. The war was briefly declared “terminated” in May and June 2026 but resumed as tensions escalated. Despite the latest report, the legal framework requires President Trump to seek continued authorization from Congress rather than declare a new conflict. This development impacts the potential for diplomatic negotiations and a US-Iran deal in 2026, as reflected in current market trends.
Key Takeaways
The report of a formal war notification by President Trump appears to decrease the likelihood of a US-Iran deal, with markets showing a decline in expectations for the inclusion of Iran Reconstruction Funding in such an agreement.
Market pricing suggests a significant move, with odds for various sub-markets related to a US-Iran deal dropping by 2 to 5 percentage points over recent hours.
