Markets rise as Rubio signals U.S.-Iran deal could come as soon as Monday

Highlights

Rubio said a deal with Iran could come on Monday but warned that it was not yet finalized.
Oil prices fell sharply: Brent dropped toward $99 a barrel, while WTI moved toward $91.
Asian stocks rose, with the Nikkei 225 up 2.8% and above 65,000 points.
The reopening of the Strait of Hormuz remains the central issue for markets.

Oil falls, Asia rises

According to BBC, Rubio, speaking during a visit to New Delhi, said the sides had a “pretty durable” basis for talks on reopening the strait. At the same time, he stressed that the work was not yet complete and that Iran’s response could take time. His comments came after Donald Trump said negotiations were proceeding in an “orderly and constructive” way, but had instructed negotiators not to rush into a final deal.

Markets reacted quickly. Japan’s Nikkei 225 rose 2.8% to 65,130.03 points, Australia’s S&P/ASX 200 added 0.4%, and the Shanghai Composite gained 0.8%. Trading in South Korea and Hong Kong was closed for holidays.

Oil prices moved lower: U.S. WTI crude fell by $5.52 to $92.21 a barrel, while Brent dropped by $5.56 to $99.06. Brent also approached a two-week low, losing about 4.5% amid expectations of a deal.

The Strait of Hormuz is the key issue

The preliminary terms of the agreement reportedly include an extension of the ceasefire, the reopening of the Strait of Hormuz and further talks on Iran’s nuclear program. A significant share of global oil and liquefied natural gas supplies passes through this route, so any signs that it could reopen immediately affect energy prices.

Former CIA Director David Petraeus told CNBC that Iran appears to be in the process of backing down over Hormuz. In his view, an initial peace agreement should require the strait to reopen without allowing Tehran to control vessel traffic, charge passage fees, or threaten another closure.

Uncertainty remains, however. Iranian officials have rejected claims that a full reopening of the strait has already been agreed, while a representative of the country’s military command said Tehran intends to retain control over the passage.

The market price of de-escalation

The market reaction shows how strongly oil prices and equity indexes depend on political signals around Iran. If an agreement is reached and the strait reopens without new restrictions, the geopolitical premium in oil could continue to decline, supporting equities, currencies of commodity-importing countries, and consumer sectors.

But until a deal is signed, markets remain vulnerable to any reversal in the talks. The key numbers of the day—Brent falling by about 4.5%, WTI losing more than $5, and the Nikkei 225 rising 2.8%—reflect not the end of the crisis, but the expectation that it may be moving into a diplomatic phase.

We also reported European stocks set to rise as the U.S. and Iran move closer to a deal.

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