Peace Talks

The ceasefire signal is real, but do not mistake de-escalation for resolution. Washington and Tehran have agreed to pause strikes and meet this week, which was enough to push Brent higher in early Asian trading before the gains were largely surrendered as markets processed what a ceasefire actually buys: a few days of headline calm while the underlying nuclear dispute remains untouched. For UK energy traders and corporates hedging forward exposure, the practical read is that the risk premium in oil has compressed temporarily without any structural change to Persian Gulf security. The second-order effect matters more: if talks stall or collapse within the week, the rebound in crude will be faster than the initial rally, because markets will have briefly dropped their guard. Watch the gap between the ceasefire announcement and any substantive negotiating text. If that gap stays empty, the oil price is mispriced.

S&P 500 futures advanced modestly in Asian hours, tracking the Iran ceasefire signal and a constructive close from last Friday. Gains are thin given residual uncertainty on the Fed path and this week's PCE data.

Brent is falling again this morning as tanker traffic through the Strait of Hormuz picks up following the Iran-US ceasefire diplomacy. The risk premium that briefly pushed oil higher when Hormuz looked exposed is unwinding fast, which is straightforwardly good for input costs across European manufacturing and aviation. The caveat is that 'peace talks produced movement' is not the same as 'the nuclear file is closed', and the market has been burned before by treating process as outcome in Gulf diplomacy. Energy traders should note that a sustained fall below $75 Brent starts to stress the fiscal breakevens of several OPEC members, which historically produces supply discipline. Watch whether Saudi Arabia calls an emergency OPEC meeting; that would be the tell that the price slide has become a political problem.

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.

Trump's 14-point peace proposal died yesterday after Iran's counterproposal ignored every nuclear concession the White House demanded. Tehran's response, delivered after a 10-day wait, focused entirely on sanctions relief and war cessation while omitting any commitment to halt uranium enrichment. The Strait of Hormuz remains closed under Iranian control, trapping 20 percent of global oil flows as Trump threatens renewed bombing if talks collapse. Oil traders now face a binary outcome: either a breakthrough by month-end or escalation that could push Brent past $120.

Gold held steady after a second weekly decline as traders parsed mixed signals from Trump's Hormuz escort plan and ongoing Iran negotiations. The administration reviews a new Iranian proposal to reopen the strait while postponing nuclear talks, with core US demands unchanged: keeping shipping routes open and limiting Iran's 460kg stockpile of 60% enriched uranium. Reports of a tanker attack in the waterway cast doubt over Trump's neutral ship guidance plan. Oil prices steadied despite the incidents. Iran's foreign minister signaled openness to talks after meeting Putin, but Supreme Leader Khamenei previously rejected US conditions outright.

Vice President JD Vance will head the American delegation to direct peace talks with Iran in Islamabad on Saturday, marking the highest-level US-Iran meeting since the 1979 Islamic Revolution. White House Press Secretary Karoline Leavitt announced the team includes Jared Kushner and Special Envoy Steve Witkoff, facing Iran's Parliament Speaker Mohammad Baqer Qalibaf. Iran claims three ceasefire violations and threatens Strait of Hormuz closure again, while the US maintains the fragile truce excludes Lebanon despite Israeli strikes killing over 100.

Islamabad will stage the first in-person US-Iran negotiations since February's war began, with Middle East envoy Steve Witkoff and Jared Kushner leading America's delegation. Iran rejected the US's 15-point plan demanding dismantling of three nuclear sites but proposed its own terms including permanent war end and $2 million per ship fees for Strait passage. Pakistan's successful mediation comes as 3,500 additional US Marines head to the region, creating negotiation under military pressure. The talks represent Trump's biggest foreign policy test since taking office.