Significant mobility has been recorded, according to American media during recent days in the negotiations between the United States and Iran, regarding the reopening of the Straits of Hormuz and a broader de-escalation agreement around the Iranian nuclear program.
The markets seem to agree for now with the narrative of Donald Trump who has finished the war about a dozen times.
Tehran has repeatedly called out the US government for a lack of credibility.
At the same time, the Iranian side does not seem to back down from its red lines regarding the straits of Hormuz while the US president Donald Trump is finding it difficult to sign a deal that would show him having completely lost the war in the Middle East.
A fact that constitutes a reality.
According to information from American government sources, the two sides are close to a preliminary memorandum of understanding, which could lead to the immediate resumption of navigation in the Straits of Hormuz, while at the same time opening the way for new negotiations regarding the nuclear program of Tehran.
The final approval of the agreement remains in the hands of Donald Trump, while the Iranian side has not yet officially confirmed the acceptance of the terms.
The vice president JD Vance stated that the talks are very close to an agreement, underlining however that open issues still exist both in the phrasing of the text and in the basic parameters of the nuclear program.
According to the American plan, the Straits of Hormuz will open immediately for international navigation, without however lifting the US naval blockade fully from the start.
The gradual easing of restrictions will be linked to the restoration of commercial shipping activity and the removal of mines that have been placed in the region.
This development is considered critical for international energy markets, as the Straits of Hormuz constitute the most important passage of oil and LNG globally.
The worst crisis in the energy market since the 1970s
According to recent analyses, the almost complete interruption of traffic in the region during the previous months caused the largest disruption in the global energy market since the 1970s.
The oil markets continue to bet on a quick end to the crisis with Iran but analysts warn that investors and consumers may be disappointed.
Oil prices recorded a rise of over 3% early on Thursday. 28/5. after the new exchange of missile attacks between the United States and Iran, as tension in the Middle East showed signs of escalating anew.
Brent, the international benchmark for oil prices, was strengthening by 2.1% at 96.29 dollars a barrel, while the American crude West Texas Intermediate returned above 90 dollars, recording a rise of 2.4%.
The head of commodities at Investec, Callum Macpherson, stated that investors are finding it incredibly difficult to gain a clear picture of the direction of the market, as prices change constantly under the influence of contradictory signals from Washington and Tehran.
As he explains, the markets are affected by continuous alternations between indications of diplomatic progress and new military conflicts, with the result that the sentiment changes within a few hours.
Macpherson referred to the information of Wednesday. 27/5. according to which Iranian officials were discussing a draft memorandum of understanding that included points of convergence between the two sides.
However, a little later the White House denied the information, characterizing it as inaccurate.
This contradictory picture unfolds parallel to new attacks and retaliations in the region, a fact which threatens to blow up the already fragile truce.
Despite the fact that markets continue to find ways to operate, Macpherson warns that the current situation cannot be maintained for a long period of time.
As he noted in an interview with CNBC, markets are finding it difficult to properly evaluate developments, at a time when real consumers, producers, and refineries are forced to continue transactions, hedge risk, and secure oil cargoes.
According to him, there are indications that some tankers continue to pass through the Straits of Hormuz, however there are no signs of a return to normalcy in this vital maritime artery.
For this reason, he estimates that prices will difficultly return anytime soon to the levels of 60 to 70 dollars per barrel that prevailed before the conflict.
The key issue is for there to be confidence that the war is definitively over and that there will be no new flare-up, he underlined, adding that the markets continue to operate, but a substantial political solution is required soon.
For his part, the senior equity analyst of Hargreaves Lansdown, Matt Britzman, noted that oil prices in the region of 90 dollars reflect a clear geopolitical risk premium that remains embedded in the market.
As he explains, investors find themselves trapped between short-term anxiety over a resurgence of conflicts and the hope that the two sides still have a strong incentive to restore energy flows.
At the same time, Britzman points out that the overall picture of the market shows that investors have not yet priced in the worst possible scenario, as oil still heads toward a second consecutive weekly drop.
A similar estimation is expressed by the FX strategist of OCBC Group Research, Sim Moh Siong.
According to him, even if there is a de-escalation of the crisis, the drop in oil prices will not be fast.
The main reason is that Tehran still maintains the capability to disrupt the operation of the Straits of Hormuz, one of the most important energy passages of the planet.
In addition, damages to energy infrastructure, the replenishment of strategic oil reserves by many countries, and the integration of a higher structural geopolitical risk into the market are estimated to keep oil prices at high levels for a long period of time.
The false optimism in the markets
At the same time, according to Reuters, international stock markets recorded new historic highs, as expectations grow for a reopening of the Straits of Hormuz and a stabilization of the global energy supply.
Analysts estimate that the crisis has already caused a huge economic cost. From the beginning of the year until the end of April, the price of Brent increased from approximately 67 dollars to 126 dollars per barrel, causing a wealth transfer of up to 6 billion dollars daily from consumers toward oil producers and energy companies.
At the same time, war risk insurance premiums for ships passing through the Persian Gulf increased even over 1,000%, burdening the cost of transporting oil and natural gas dramatically.
According to data from Reuters, Iraq alone moved approximately 10 million barrels of oil through the Straits of Hormuz in April, a number significantly reduced compared to normal levels of movement.
Economic relief and frozen funds
A central point is the economic compensation of Iran.
Donald Trump has made it clear to his associates that he does not wish it to appear that the United States is directly funding Tehran. However, American officials recognize that without significant economic trade-offs, there can be no agreement.
For this reason, schemes through third countries, mainly Qatar, are being examined so that Iranian funds can be released without Washington appearing as a direct funder of the Iranian regime.
According to information from negotiating sources, Iran is pressing for immediate access to frozen funds located in Qatar and other countries, with amounts estimated to range from 12 to even 24 billion dollars.
Other information states that even larger packages of financial support and investments are on the table, which may touch even 300 billion dollars over time.
According to reports from think tanks that closely monitor the negotiations, Tehran is requesting the release of part of the funds immediately after the signing of the agreement and the remaining amount within 60 days.
These funds could be used for the purchase of medicines, industrial raw materials, and critical imports, while Tehran is reportedly also seeking a broader easing of restrictions on its oil exports.
Nuclear program and geopolitical reactions
Despite the significant progress in the talks, the memorandum under formation does not yet include an agreement on the Iranian missile program.
The issue of uranium enrichment also remains outside of the final regulation. Donald Trump had initially requested a full and permanent ban, however in recent weeks he left open the possibility of a multi-year suspension instead of a definitive halt.
The issue of managing the stocks of highly enriched uranium that Iran currently possesses also remains critical.
Inside the US, the talks are already causing intense reactions.
Critics of the negotiation argue that Washington risks repeating the policy of the Barack Obama period, when 1.7 billion dollars had been released to Iran after the agreement of 2015.
At the same time, figures who support a harsher stance toward Tehran, among them Benjamin Netanyahu, Ted Cruz, and Lindsey Graham, express strong opposition to any new compromise.
Despite the reactions, international markets continue to move as if they consider a final agreement likely, an element that also explains the significant de-escalation in oil prices during recent days.
Analysts estimate that Donald Trump will fail to show a diplomatic and economic success that could stabilize both the energy markets and the international investment climate, and chaos will be maintained for long.
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