Oil Futures

Brent crude fell 3% to $111/bbl after at least one vessel successfully passed through the Strait of Hormuz, signaling partial reopening of the chokepoint that carries 20% of global oil supplies. Iranian state media reported 30 vessels crossing following Trump-Xi talks that affirmed the need for "free flow of energy," while LSEG ship tracking showed a Panama-flagged tanker managed by Japan's Eneos completing passage. The move unwound weeks of $100+ pricing, but 63 laden VLCCs remain trapped inside the Persian Gulf with another 55 waiting to enter.

JPMorgan's strategists are telling clients that markets see potential resolution pathways in the Middle East despite yesterday's Strait of Hormuz closure. The bank points to oil futures curves showing backwardation flattening after three months, suggesting traders expect supply disruptions to resolve within 60-90 days rather than become permanent. Equity volatility premiums remain elevated but are no longer accelerating, indicating professional money isn't positioning for sustained conflict.

American and Iranian officials are drafting a framework agreement that could end the year-long Middle East conflict within months, according to sources close to the talks. The deal would freeze Iran's uranium enrichment at current levels in exchange for sanctions relief worth an estimated $90 billion. Oil futures fell 4 percent overnight as traders priced in reduced supply disruption risk. If successful, the agreement would mark the most significant US-Iran diplomatic breakthrough since the 2015 nuclear deal Trump abandoned.