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OK folks, there’s a positive development in the Iran situation – let’s take a quick look at what’s going on.
Yesterday, Abbas Araqchi officially confirmed what the media had been talking about: Iran is preparing to return to the situation that existed before the military escalation. In fact, the situation appears to be relatively simple – all parties have lifted their own restrictions. Iran fully reopened the Strait of Hormuz to navigation, in return for the United States lifting restrictions on ships entering and leaving Iranian ports.
As for other documents, including the nuclear agreement, they will be temporarily postponed, while negotiations will continue according to the mechanism before the outbreak of the crisis.
Frankly, this is probably one of the best-case scenarios for the global economy. Oil prices are likely to fall, which could give a strong boost to other markets such as stocks, cryptocurrencies and other assets.
But there is a political element here.
Hours later, Trump said the United States was not prepared to accept the offer because it did not include a nuclear deal. This is the most important point: the problem itself is solvable, but the current delay is related to political considerations.
Trump needs to provide clear results to voters. He must explain why everything happened – the military action, the losses, rising oil prices and economic pressure. Without a nuclear deal or tangible achievements, it would be difficult to sell what happened as a political success.
Simply returning to the previous state is not an easy task for him now.
At the same time, there is another important signal worth noting: The pressure from the United States seems to be starting to have an effect. Previously, Iran was unwilling to even discuss the idea of withdrawal, but now it has become more open and willing to return to its previous plan.
There could be several reasons for this, such as internal stability or the impact of sanctions and restrictions on the real economy. But most importantly, Iran’s position has become more flexible, which is a positive development.
It is possible that we can reach an agreement or a settlement sooner than many expect because the world does need lower oil prices and a return to some degree of stability.
As for oil, it is still trading at high levels. Brent crude oil is currently trading roughly between $103 and $105, depending on the platform, but there are some differences due to volatility. But the main point is that the price remains above the $100 level, which means that the market has not yet fully priced in the positive scenario, although there are gradual signs in this direction.
Soon, we moved on to the rest of the news.
As I mentioned before, the U.S. corporate earnings season is off to a weak start, with bank results in particular falling short of expectations. But that changed relatively this week – with most large companies and even many mid-sized companies reporting better-than-expected results.
This is clearly reflected in the indicators: the S&P 500 continues to rise, other US indexes are doing well, and other developed market markets are also performing well.
As a result, despite geopolitical tensions and economic pressures, financial markets continue to maintain their integrity and investment demand remains strong.
Therefore, I don’t expect big moves in the short term, except to the upside. If an unexpected peace deal or settlement suddenly emerges, we could see a significant drop in oil prices.
But I always take this situation into account in my strategy.
For now, we continue to operate as usual.