Market Perspective Monday's oil price movements were highly turbulent, driven by the twists and turns in U.S.-Iran ceasefire negotiations. Positive signals from the talks in the afternoon triggered a sharp price drop, only to be reversed overnight as both sides expressed dissatisfaction with each other's demands, pushing prices to new intraday highs. In the early hours of Tuesday, Trump intervened again to de-escalate tensions, announcing a delay in the planned strike on Iran. Reports that the U.S. would extend sanctions waivers on Russian oil by 30 days further contributed to prices retreating from their peak. Trump ultimately refrained from a decision that could have spiraled out of control, citing a perceived high chance of reaching a deal with Iran and acceding to international calls to postpone the strike originally scheduled for the following day. He insisted that any agreement must prevent Iran from acquiring nuclear weapons and directed the U.S. military to remain prepared for a large-scale strike if an acceptable deal is not reached. Clearly, Trump continues to employ maximum pressure tactics alongside some concessions, using a mix of coercion and inducement to secure an agreement with Iran. While he appears to believe this approach remains effective, it risks miscalculation; the so-called "art of the deal" seems to be wearing thin on Tehran.
Iranian President Ebrahim Raisi stated that dialogue does not equate to surrender. Iran engages in talks with dignity, authority, and a commitment to safeguarding national interests, vowing never to compromise the legitimate rights of its people and state under any circumstances. He affirmed, "We will defend Iran's interests and dignity with logic and full dedication to serving the people until the very end." Senior military advisor to Iran's Supreme Leader, Yahya Rahim Safavi, remarked, "The U.S. set a deadline for military action and then canceled it itself! This is an attempt to force the Iranian people and government into submission with false hope!" He added, "The iron fist formed by our powerful armed forces and the great Iranian nation will compel them to retreat and surrender." Supreme Leader Ayatollah Ali Khamenei reiterated in a social media post, echoing his first statement after taking office, that Iran is considering opening new fronts in areas where the enemy lacks expertise. The statement noted that research on such fronts is complete, highlighting that "the enemy has minimal experience and is highly vulnerable in these domains." It warned that Iran would activate these new fronts if the "state of war" persists.
With both the U.S. and Iran showing willingness to cease hostilities and make some concessions, attention has shifted to potential new negotiations, possibly in Islamabad, as expressed optimistically by Pakistan's Prime Minister. International Energy Agency Executive Director Fatih Birol warned that commercial oil inventories are depleting rapidly, with only weeks of supply left. This round of talks is crucial for both nations to alleviate pressure and is equally pivotal for the oil market, as the outcome is likely to trigger significant price volatility. Notably, Iran's negotiating stance reflects a victor's perspective. A senior Iranian source indicated that the U.S. has shown flexibility in current discussions, including on restrictions to Iran's nuclear program, which has encouraged Tehran to continue talks. However, substantive differences remain due to what Iran views as U.S. greed and a lack of realism. This remains the core challenge: bridging these gaps to reach a compromise. Trump's continued patience and efforts to negotiate, despite his dwindling patience, suggest a strong desire to secure a peace deal with Iran—at least a vague framework agreement that allows him to claim progress. Yet Iran demands more concrete commitments.
Time is running out for Trump to resolve the stalemate with Iran. While Iran appears to have made minor concessions, its core principles are unlikely to see further flexibility, making it difficult to envision how these differences can be reconciled. Trump's response will be key in determining the trajectory of U.S.-Iran hostilities, with an answer expected soon. The uncertainty in geopolitical developments is likely to keep oil prices highly volatile; traders should focus on timing and enhance risk management.
Daily Market Data [1] WTI crude oil futures rose by $3.24, or 3.07%, to settle at $108.66 per barrel; Brent crude futures increased by $2.84, or 2.6%, to close at $112.1 per barrel; INE crude oil futures gained 2.17%, ending at 686.9 yuan. [2] The U.S. dollar index fell 0.29% to 98.98; the USD/CNH rate on the Hong Kong Exchange dropped 0.12% to 6.7867; the U.S. 10-year Treasury yield rose 0.1% to 109.3; the Dow Jones Industrial Average advanced 0.32% to 49,686.12.
Recent Developments [1] Iran Proposes Long-Term, Multi-Phase Ceasefire with Unconditional Uranium Transfer to Russia According to Al Arabiya, Iran's latest proposal outlines a desire for a prolonged, multi-stage ceasefire agreement. Iran seeks the gradual and secure reopening of the Strait of Hormuz. It agrees to a long-term freeze on its nuclear program rather than complete dismantlement. Iran is willing to unconditionally transfer enriched uranium to Russia, not the U.S. Additionally, Iran aims to include political wording in any deal to save face. It also wants Pakistan and Oman to play a role in managing any friction in the Strait of Hormuz. The proposal further requests economic facilitation measures in lieu of compensation, seeks to separate maritime passage issues from nuclear complexities, and demands multiple international guarantees for any potential agreement.
According to Iran's Tasnim News Agency, sources close to the negotiation team stated that the U.S. has accepted lifting oil sanctions on Iran in its latest draft text. Unlike before, the U.S. has agreed to temporarily waive oil sanctions on Iran during the negotiation period. This temporary waiver implies a provisional lifting of sanctions. Iran insists that the removal of all sanctions must be part of the U.S. commitment. The U.S. has proposed suspending relevant sanctions by the Office of Foreign Assets Control (OFAC) pending a final understanding.
[2] Surge in "Opaque" Oil Trading via Hormuz Bypasses Dollar, Testing "Petrodollar" System (1) Since the outbreak of conflict on February 28, approximately one-fifth of Persian Gulf oil supplies have been disrupted, severely impacting Asian economies that rely on the region for about 60% of their imports. As the blockade of the Strait of Hormuz enters its 13th week, increasing evidence suggests that major Asian importers are securing critical shipments of crude oil, chemicals, and fertilizers through direct arrangements with Gulf producers, often with Iran's consent. Several tankers have recently transited the strait with tracking systems disabled, following direct contact between importing nations' leaders and Iran. (2) The specific structures of these bilateral and trilateral deals are "opaque"—lacking public details on transaction specifics, pricing mechanisms, and settlement methods, making it difficult for outsiders to track actual flows and amounts. Many transactions are likely settled in currencies other than the U.S. dollar or through informal barter arrangements. Whether or not explicit transit fees are paid to Tehran, this pattern strengthens Iran's de facto control over the crucial waterway. Iran aims to institutionalize this influence in any future agreement, but Trump has explicitly rejected this demand. Consultancies note that under current circumstances, import-dependent countries like Japan and South Korea have strong incentives to expand their bilateral relationship networks with Gulf states and other global oil and gas exporters. (3) From a trading psychology perspective, transit through the Strait of Hormuz may now be permanently embedded with a geopolitical risk premium, raising the cost of Middle Eastern crude and forcing importers to reconsider supply security. While the U.S. remains the world's leading oil and gas producer and is expected to dominate the global economy for decades to come, the aftermath of the Iran conflict could lead to fragmented oil pricing, weakening Washington's control over the financial architecture that has underpinned global oil trade for decades.
[3] Tanker Congestion Near Iran's Kharg Island Swells to 23 Vessels, Exacerbating Export Bottlenecks (1) Approximately 23 tankers are currently clustered near Kharg Island, Iran's primary crude oil export hub, marking the largest such gathering since the U.S. Navy began blockading Iranian ports, intercepting, and seizing vessels a month ago. (2) Satellite imagery from May 16 shows these tankers anchored or docked at liquefied petroleum gas loading terminals; this has been confirmed by the U.S. non-profit policy advisory group United Against Nuclear Iran (UANI). In contrast, only four tankers were present on April 13, prior to the U.S. military's interception buildup. (3) UANI advisor Charlie Brown noted that the increasing number of vessels gathering at anchor indicates worsening delays and bottlenecks within Iran's crude oil and petroleum export system.
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