Over the weekend, there were frequent positive signals from the U.S.–Iran peace negotiations. If an agreement is reached, the reopening of the Strait could be imminent. As discussed in last week’s live session, the core sticking point in current negotiations lies in uranium enrichment. The U.S. is seeking Iran’s commitment to abandon uranium enrichment before lifting sanctions, while Iran prefers that sanctions be lifted first before addressing enrichment. If this divergence can be reconciled, negotiations could accelerate; otherwise, entrenched positions on both sides may stall or even derail the process. Recent developments appear favorable for the reopening of the Strait, which is likely to trigger a notable shift in market positioning next week.
1. Direct Impact on Crude Oil
There is little doubt that reopening the Strait would be bearish for oil prices. From a technical perspective, a break below the 10-week moving average next week would signal the end of the current upward cycle in crude. Fundamentally, spot crude prices are already at elevated levels. Based on recent discussions with tanker owners during a business trip to Hong Kong, effective spot prices are approaching USD 150 per barrel. This stands in contrast to WTI futures at around USD 100 per barrel; however, WTI primarily reflects U.S. domestic pricing and can differ significantly from Gulf-region crude benchmarks. Such elevated prices are difficult for consuming countries to sustain and have historically proven unsustainable.
Therefore, once the Strait reopens, oil prices are likely to react immediately. Additionally, there are reports suggesting that a U.S.–Iran agreement could lead to a relaxation of restrictions on Iranian oil exports. The release of Iranian inventories into the market would ease supply conditions, reinforcing a medium- to long-term bearish outlook for oil.
For those holding long positions in crude, it would be prudent to take profit or cut losses if prices fall below the 10-week moving average, rather than taking unnecessary risk.
2. Can Gold Reverse Its Weakness?
Elevated oil prices have driven up inflation expectations, leading markets to anticipate that the Federal Reserve may be forced to tighten monetary policy. This has weighed on precious metals in recent periods. However, if the Strait reopens and oil prices decline, inflation expectations may cool. The new Fed Chair could potentially align with Trump’s policy preference and re-enter a rate-cutting cycle. If this scenario materializes, gold prices are likely to stabilize. While a repeat of last year’s sharp rally is not guaranteed, volatility should normalize, and a renewed upward trend could emerge.
From a technical standpoint, a breakout above the upper boundary of the current descending channel would signal a potential re-entry opportunity. This level is currently around USD 4,700 per ounce, and market participants should monitor price action closely next week.
3. U.S. Equity Indices Remain Resilient?
A successful U.S.–Iran agreement and the reopening of the Strait would likely reduce inflation expectations, which could serve as a political achievement for Trump ahead of mid-term considerations. In this context, U.S. equity indices are unlikely to face significant downside risks—unless there is an unexpected escalation, such as renewed military action against Iran.
At present, there are no major technical or fundamental red flags for U.S. equities. The prevailing strategy remains to follow the trend.
$E-mini S&P 500 - main 2606(ESmain)$ $Micro E-mini S&P 500 - main 2606(MESmain)$ $E-mini Dow Jones - main 2606(YMmain)$ $Micro E-mini Dow Jones - main 2606(MYMmain)$ $E-mini Nasdaq 100 - main 2606(NQmain)$ $Micro E-Mini Nasdaq 100 - main 2606(MNQmain)$ $Gold - main 2606(GCmain)$ $E-Micro Gold - main 2606(MGCmain)$ $1-Ounce Gold - main 2606(1OZmain)$ $E-mini Gold - main 2606(QOmain)$ $WTI Crude Oil - main 2607(CLmain)$ $E-mini Crude Oil - main 2607(QMmain)$ $Micro WTI Crude Oil - main 2607(MCLmain)$ $Natural Gas - main 2607(NGmain)$ $E-Mini Natural Gas - main 2607(QGmain)$
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