Munir's Plane Never Left: The Sequencing Dispute Keeping the Iran War Alive
Pakistan's army chief pulled back from Tehran as the US and Iran remain deadlocked over whether nuclear talks must begin on day one of any deal, or follow a 30-day pause — a procedural gap that has stalled every ceasefire extension since April.
What happened, yesterday
- Diplomacy22 May US Secretary Rubio said there were 'some good signs' for an Iran deal but cautioned against exaggerating progress; Pakistan's Mohsin Naqvi flew to Tehran — his second trip this week — carrying a US message after army chief Munir called off his own visit.
- Escalation22 May Pakistan Army Chief Asim Munir cancelled his planned visit to Tehran after both sides failed to agree on a final framework text; Interior Minister Naqvi was sent as substitute envoy.
- Diplomacy22 May The core impasse: Washington insists the nuclear file must be on the table from day one of any agreement; Tehran wants a 30-day confidence-building period — ending the war and lifting the US naval blockade — before any nuclear negotiation begins.
- Escalationongoing The Strait of Hormuz remains under Iranian control with tolls reportedly above $1 million per vessel; the US Navy counter-blockade of Iranian ports, in place since April 13, continues. Hormuz has been partly closed since March 4.
- Escalation21 May Israel deported hundreds of Gaza flotilla activists including EU citizens; EU foreign policy chief Kaja Kallas called Israeli Minister Ben Gvir's conduct 'unbecoming of anyone holding office in a democracy', deepening the EU-Israel rift.
- Escalationlate May Kataib Hezbollah leader Abu Hussein called Houthi leadership to discuss 'high coordination between the axis powers, especially between Iraq and Yemen', signalling continued proxy pressure on multiple fronts.
- Diplomacyongoing The IAEA has not been able to inspect Iran's new underground enrichment facility at Isfahan, declared in June 2025 — the agency says it cannot assess whether centrifuges have been installed.
- MarketMay–June 2026 Japan Airlines announced fuel surcharges on international tickets will more than double for the May–June period: long-haul flights (Tokyo to North America, Europe) rising from JPY 29,000 to JPY 56,000 per ticket, reflecting war-linked jet fuel costs.
The story
Asim Munir's plane never left. Pakistan's army chief had been expected in Tehran on Friday, carrying a US message and enough momentum, perhaps, to break the nuclear sequencing impasse that has stalled every ceasefire extension talk since April. Instead, Mohsin Naqvi — Munir's Interior Minister and now a serial Tehran envoy — flew in his place for the second time this week. The gap between Washington and Tehran is not ideological in the way it once was. It is procedural: the US wants the nuclear file opened on day one of any agreement; Iran wants thirty days of ceasefire and a lifted naval blockade before sitting across from any inspector. Marco Rubio spoke of 'good signs'. But Munir did not travel, which tells you something about the signs. Brent has fallen hard this month as markets priced in a resolution. If Naqvi returns without a framework, some of that discount unwinds before Friday close.
Who moved today
| Actor | What changed today | Consequence |
|---|---|---|
| Pakistan (Munir/Naqvi) | Munir cancelled Tehran visit; Naqvi flew as substitute envoy for the second time this week | Signals that a final framework text is still out of reach; the mediation channel is alive but moving slowly |
| Iran | Holding to sequencing demand: 30-day pause and blockade lift before nuclear talks begin | Keeps the stalemate alive; the procedural gap, not ideology, is now the blocking factor |
| US (Rubio) | 'Some slight progress' language on Iran deal, while reaffirming nuclear must be part of any day-one terms | Rubio's cautious optimism gives the Pakistan channel oxygen but sets the floor Washington won't go below |
| Israel | Deported hundreds of Gaza flotilla activists, including EU citizens | Kallas's rebuke is the sharpest EU-Israel language since the war; risks conditioning further EU diplomatic support |
| Houthi–Kataib Hezbollah axis | Late-May coordination call between Kataib Hezbollah and Houthi leadership on joint pressure | Any Hormuz opening can be offset by simultaneous escalation in Iraq and Yemen, splitting US military focus |
| Japan Airlines | International fuel surcharge moved from Zone H to Zone Q for May–June; long-haul surcharges doubled | Aviation fuel cost pass-through accelerates; Asia-to-Europe travel becomes materially more expensive, suppressing discretionary demand |
Energy and gold
Brent and WTI climbed massively since the war began and remain well above pre-conflict levels, but this month they have given back ground sharply — markets pricing in diplomacy, then hesitating as the Pakistan mediation stalled. European gas followed a similar arc. Gold is the counterintuitive story: it has fallen well below where it stood when the war began, suggesting the initial fear premium has been absorbed and that the conflict has settled into a managed stalemate rather than an all-out shock. On currencies, the yen keeps drifting weaker under the oil-import burden, while the yuan has barely moved — Beijing is managing the rate. The euro is softer since the war began. On the US Treasury curve, long-end yields have moved up significantly since February — the five-year has done the most work, pricing in inflation persistence and fiscal stress rather than a quick resolution.
| Instrument | Now | 24h | 7d | MTD | Since war | YTD |
|---|---|---|---|---|---|---|
| Brent Crude | 103.60 USD/bbl | +1.0% | -5.2% | -9.1% | +42.9% | +70.3% |
| WTI Crude | 96.80 USD/bbl | +0.5% | -8.2% | -7.9% | +44.4% | +68.6% |
| TTF Natural Gas | 47.77 EUR/MWh | -3.3% | -4.8% | +3.9% | +49.5% | +69.6% |
| Henry Hub Natural Gas | 3.06 USD/MMBtu | +1.5% | +3.4% | +10.7% | +7.1% | -16.9% |
| Gold | 4,525.20 USD/oz | -0.3% | -0.7% | -1.9% | -13.5% | +4.6% |
Currencies vs the dollar
| Pair | Now | 24h | 7d | Since war | YTD |
|---|---|---|---|---|---|
| USD / CNY | 6.792 | -0.1% | +0.1% | -0.7% | -2.9% |
| USD / JPY | 159.034 | +0.1% | +0.4% | +2.0% | +1.7% |
| EUR / USD | 1.162 | -0.1% | -0.4% | -1.6% | -1.1% |
| USD / ARS | 1,385.000 | -0.9% | -0.5% | -1.7% | -4.6% |
| AUD / USD | 0.714 | -0.1% | -1.0% | +0.5% | +6.6% |
| USD / BRL | 5.005 | -0.1% | +0.0% | -2.6% | -8.6% |
| USD / CAD | 1.379 | +0.3% | +0.5% | +0.9% | +0.7% |
| GBP / USD | 1.345 | +0.1% | +0.4% | -0.3% | -0.1% |
| USD / IDR | 17,712.000 | +0.3% | +1.0% | +5.8% | +6.0% |
| USD / INR | 95.680 | -0.9% | -0.0% | +5.1% | +6.6% |
| USD / KRW | 1,512.580 | +0.9% | +1.3% | +5.6% | +5.2% |
| USD / MXN | 17.298 | -0.0% | +0.4% | +0.6% | -3.8% |
| USD / RUB | 71.390 | +0.3% | -2.5% | -7.1% | -10.2% |
| USD / SAR | 3.752 | +0.7% | +1.7% | +0.2% | +0.1% |
| USD / TRY | 45.738 | +0.3% | +0.4% | +4.1% | +6.5% |
| USD / ZAR | 16.407 | -0.3% | -0.5% | +3.1% | -1.1% |
US Treasury curve
| Maturity | Yield | Since war | YTD |
|---|---|---|---|
| US 3M T-Bill | 3.578% | +0bp | +3bp |
| US 5Y Note | 4.222% | +71bp | +50bp |
| US 10Y Note | 4.546% | +58bp | +38bp |
| US 30Y Bond | 5.073% | +44bp | +23bp |
What it costs, today
| Fuel | Benchmark / pump | Driver + passthrough |
|---|---|---|
| Vehicle fuel | India petrol: Delhi ₹98.64/L · Mumbai ₹107.59/L · Bangalore ₹107.16/L · Hyderabad ₹111.88/L; India diesel: Delhi ₹91.58/L · Mumbai ₹94.08/L | Prices stable on May 22 — Indian government holding pump prices despite Brent elevated well above pre-war levels; fiscal subsidy burden widening as global crude stays high |
| Cooking gas (LPG) | India domestic 14.2kg: Delhi ₹913 · Mumbai ₹912.50; India commercial 19kg: Delhi ₹3,071.50 · Mumbai ₹3,024 (commercial up ₹993 on May 1) | Domestic cylinder prices unchanged since March; commercial cylinders absorbed the Saudi Aramco CP spike directly on May 1 — war-linked Saudi CP revisions feeding through to hospitality and food sectors immediately |
| Marine shipping fuel (VLSFO) | Singapore VLSFO ~$829.50/mt (May 22); was $795/mt on May 13; forecast $829/mt Q2 average | Hormuz assumed closed through late May; full recovery to pre-conflict freight routing not expected until late 2026 — every vessel avoiding the Strait adds days and fuel; $395M/day in extra shipping costs estimated from Hormuz disruption alone |
| Jet fuel / aviation | US Jet A $7.94/gal (national retail average, May 2026); Singapore kero-type jet fuel ~$147/bbl (Feb–Mar 2026 average); JAL long-haul surcharge JPY 56,000/ticket (May–June, up from JPY 29,000) | Airlines passing Brent spike directly into surcharges; Japan Airlines and ANA doubling international surcharges for May–June period; long-haul travel economics breaking for leisure passengers |
| Diesel (industrial / freight) | India diesel: Delhi ₹91.58/L · Mumbai ₹94.08/L · Kolkata ₹92.20/L | Industrial and trucking sector seeing stable pump prices in India due to government stabilisation, but logistics firms absorbing higher costs through tighter margins or freight rate increases |
Three ways this might unfold
Deal within the week ~20%
If Naqvi returns from Tehran with a framework text both sides can accept — nuclear talks sequenced after a 30-day pause, US naval counter-blockade suspended — and Munir then flies to finalise it:
- Hormuz re-opens to normal traffic within days of a signed framework
- Brent pulls back sharply — a deal premium unwind of $10-15/bbl is plausible
- Japanese yen and Indian rupee recover as oil-import pressure eases
- IAEA inspectors return to Isfahan — enrichment status becomes clearer
- Houthi and Kataib Hezbollah activity drops but does not stop; proxy groups retain leverage
- Trump frames it as a personal diplomatic win; November political calendar accelerates timeline pressure
- European gas prices fall back toward pre-war range as LNG routing through Hormuz normalises
Escalation cycle resumes ~25%
If the Pakistan mediation collapses — Naqvi returns empty-handed, the US tightens the counter-blockade, and Iran raises Hormuz tolls again or resumes proxy coordination to show resolve:
- Oil retraces higher; WTI back above $105 within days
- The ceasefire extension Trump granted on April 21 comes under question
- Hezbollah rocket tempo from Lebanon picks up, reopening the northern Israel front
- India's energy costs rise further, forcing a political decision on subsidy versus passthrough
- Kataib Hezbollah attacks on US bases in Iraq escalate, putting US casualties back in the headlines
- EU-Israel rift over flotilla deepens into sanctions discussion, fracturing Western coalition further
- Gold recovers from its since-war lows as risk premium re-enters the market
Managed stalemate holds through June ~55%
If Naqvi's visit ends inconclusively but talks don't collapse — both sides maintain the ceasefire on paper while Hormuz stays partially blocked and back-channel work continues into June:
- Oil stays in a wide band either side of $100, neither spiking nor collapsing
- Shipping rerouting via Cape of Good Hope becomes semi-permanent cost of doing business
- GCC economies continue contracting — Qatar and Kuwait take the deepest hits
- India holds pump prices steady but subsidy deficit widens into Q3 budget season
- IAEA blindspot at Isfahan persists, keeping US nuclear-from-day-one demand non-negotiable
- Pakistan's Munir makes one more attempt in early June, perhaps in a neutral city rather than Tehran
- Markets remain in a headline-driven oscillation; each Rubio statement moves Brent $2-3
Around the world
| Country | What changed | Deduction |
|---|---|---|
| 🇺🇸 United States | Rubio cited 'slight progress' in Iran talks while holding firm: nuclear must be on the table from day one of any deal | Washington's sequencing demand is not softening; the deal, if it comes, will be on US terms on the nuclear file or not at all |
| 🇮🇷 Iran | Received Naqvi; maintains that nuclear talks require a 30-day confidence-building period before they begin | Tehran is not collapsing under blockade pressure; the 30-day sequencing demand is a face-saving mechanism that may be bridgeable but isn't yet |
| 🇵🇰 Pakistan | Munir cancelled Tehran visit; Naqvi sent twice in one week as back-channel carrier | Islamabad is doing the heaviest diplomatic lifting of any non-belligerent; its credibility as mediator depends on producing something tangible soon |
| 🇮🇱 Israel | Deported Gaza flotilla activists including EU citizens; Ben Gvir's conduct condemned by Kallas | Israel is testing how far EU patience stretches; the flotilla episode is a political liability that reduces room for EU governments to publicly back Israeli positions |
| 🇦🇪 UAE | Deepening cooperation with Israel post-war; diverging from Saudi Arabia on Israel alignment | Abu Dhabi is betting on a post-Iran-war Middle East in which Israel is a strategic partner; this puts it at odds with Gulf public opinion and Riyadh's calculus |
| 🇸🇦 Saudi Arabia | Frustrated by UAE's Israel alignment; continuing to push for permanent Hormuz re-opening as condition of any deal | Riyadh's balancer role is being tested; its economy is contracting (-1.4% IMF projection) even as it technically benefits from elevated oil — Hormuz disruption outweighs the price gain |
| 🇮🇳 India | BRICS foreign ministers meeting in Delhi ended without consensus; Jaishankar called for maritime freedom, no war position taken | India's silence tracks its energy self-interest; as long as discounted crude keeps flowing, New Delhi will not risk either relationship — but the silence is becoming conspicuous |
| 🇯🇵 Japan | Japan Airlines doubling long-haul fuel surcharges; yen continues to drift weaker under oil-import pressure | Japan is absorbing war costs through currency weakness and consumer passthrough; the BOJ's ability to raise rates is constrained by the growth hit from elevated energy |
| 🇨🇳 China | Quietly adding to gold reserves; yuan held stable; geo-economic reorientation toward North African energy underway | Beijing is hedging: buying gold, managing currency exposure, and building alternative supply chains to reduce Hormuz dependency — all without taking a public war position |
Reserves — who holds what, who is moving
Poland is the most active buyer in the recent reporting period, adding sizeable tonnage to its pile. The Central Asian group — Uzbekistan, Azerbaijan, Kazakhstan — are all buying steadily, a pattern consistent with countries hedging against dollar exposure and regional spillover risk from the Iran war. On the other side, Turkey is the standout seller by a wide margin — offloading at a rate that points to currency defence and war-related spending rather than portfolio rotation. Russia has also been a net seller. China continues adding small but consistent amounts to its official gold holdings. On FX reserves, China's stockpile sits in a category of its own, with Japan and Switzerland following at a significant distance.
Gold reserves — top 15 holders (tonnes)
| Country | Tonnes | Δ last reading | Ref |
|---|---|---|---|
| United States | 8,133.0 | — | 2026-03 |
| Germany | 3,350.0 | — | 2025-12 |
| Italy | 2,452.0 | — | 2026-03 |
| France | 2,437.0 | — | 2025-12 |
| China | 2,313.0 | +7.00 | 2026-03 |
| Russia | 2,305.0 | -22.00 | 2026-03 |
| Switzerland | 1,040.0 | — | 2025-12 |
| India | 881.0 | +1.00 | 2026-03 |
| Japan | 846.0 | — | 2026-03 |
| Netherlands | 612.0 | — | 2025-12 |
| Poland | 582.0 | +32.00 | 2026-03 |
| Turkey | 535.0 | -79.00 | 2026-03 |
| Euro Area | 507.0 | — | 2025-09 |
| Taiwan | 424.0 | — | 2025-12 |
| Uzbekistan | 416.0 | +26.00 | 2026-03 |
Biggest buyers
| Country | Change | Now |
|---|---|---|
| Poland | +32.00 t | 582.0 |
| Uzbekistan | +26.00 t | 416.0 |
| Azerbaijan | +15.00 t | 200.0 |
| Kazakhstan | +13.00 t | 354.0 |
| China | +7.00 t | 2,313.0 |
| Iraq | +6.00 t | 171.0 |
| Czech Republic | +5.03 t | 76.6 |
Biggest sellers
| Country | Change | Now |
|---|---|---|
| Turkey | -79.00 t | 535.0 |
| Russia | -22.00 t | 2,305.0 |
| Ghana | -18.46 t | 18.6 |
| Bulgaria | -1.89 t | 41.0 |
| Bolivia | -0.03 t | 22.5 |
| Chile | -0.02 t | 0.2 |
| Pakistan | +0.03 t | 64.8 |
FX reserves — top 15 (excluding gold)
| Country | Reserves USD | As of |
|---|---|---|
| China | $3,264.8B | 2024 |
| Japan | $1,159.7B | 2024 |
| Switzerland | $822.1B | 2024 |
| India | $569.5B | 2024 |
| Euro area | $546.0B | 2024 |
| Saudi Arabia | $436.8B | 2024 |
| Russian Federation | $412.7B | 2024 |
| Korea, Rep. | $409.5B | 2024 |
| Singapore | $365.5B | 2024 |
| Brazil | $318.9B | 2024 |
| United Arab Emirates | $231.7B | 2024 |
| United States | $227.8B | 2024 |
| Mexico | $221.9B | 2024 |
| Thailand | $217.3B | 2024 |
| Israel | $214.5B | 2024 |
Threads worth pulling
Munir no-show → oil premium re-entry → India subsidy fiscal cliff When Pakistan's mediation visibly stalls, Brent recovers some of its MTD losses. Every dollar above the government's import assumption widens India's fuel subsidy deficit. With elections coming, Delhi has limited room to pass costs on — the gap becomes a fiscal time-bomb ticking at ₹913 domestic LPG.
Turkey gold selling → lira defence → NATO southern flank risk Turkey has shed more gold than any other central bank in the reporting period. The pattern mirrors Ankara's 2018–2022 lira defence playbook: offload reserves to support the currency while war-linked energy costs pressure the current account. A weakening lira under war conditions can revive the domestic inflation spiral that fractured Erdogan's coalition before.
IAEA Isfahan blindspot → US nuclear floor → Munir trip cancellation Until inspectors enter the Isfahan underground facility, Washington has no idea whether Iran has moved enriched material underground and installed new centrifuges. This uncertainty makes it politically impossible for Rubio to accept any deal that defers the nuclear file — which is precisely what Iran is offering. The IAEA access problem is the hidden structural reason talks are deadlocked.
Kataib Hezbollah–Houthi coordination call → Hormuz re-opening decoupled from proxy stand-down Any deal that reopens the Strait of Hormuz does not automatically end proxy attacks. If Kataib Hezbollah keeps striking US bases in Iraq while Houthis maintain Red Sea pressure, Washington's military focus stays divided and the 'deal' only solves the headline issue while the theatre-wide pressure continues.
Japan Airlines surcharge doubling → Asia outbound tourism collapse → regional hotel and aviation equity repricing When long-haul fuel surcharges double, discretionary travel breaks first. The leisure travel equation from Tokyo to Europe or North America becomes economically absurd for middle-income travellers. Revenue per available seat falls, hotel booking windows in European capitals from Asian tourists shorten, and Asia-Pacific airline equities begin pricing permanent demand loss rather than a temporary spike.
India's BRICS silence + energy priority → China-India oil corridor → BRICS consensus impossible India's refusal to condemn the war is structurally linked to its continued purchase of discounted Russian and Iranian crude. This makes it impossible for BRICS to produce a unified anti-war statement — India will not vote to sanction the very supply chains keeping its refineries running. The BRICS chair's silence is not diplomatic; it is petroleum.
What others are saying
Stimson Center (May 2026 — Global Markets and the Strait of Hormuz). The Iran conflict triggered what the IEA called the largest supply disruption in the history of the global oil market. The IMF has revised MENA growth down sharply, with Qatar projected at -14.7% and every GCC economy now in contraction. The economic damage is running ahead of the diplomatic calendar.
Carnegie Endowment — Aaron David Miller (May 2026). Iran now exercises 'an unprecedented degree of control over the Strait of Hormuz' — it has converted a longstanding threat into a daily operational reality. The ceasefire has not changed this; it has merely paused the kinetic exchange while the leverage instrument remains fully armed.
Chatham House (May 2026 — Iran war reshaping Saudi strategy). Riyadh and Abu Dhabi are no longer reading from the same script. The UAE's deepening Israel alignment and its quiet exit signals on OPEC have put the GCC's strategic coherence under more stress than at any point since 2017. The war has not united the Gulf; it has stratified it.
What we'll be watching
- Does Mohsin Naqvi emerge from Tehran with a framework text — or a signal that talks are on pause?
- Rubio's language: any softening from 'nuclear on day one'? Watch for conditional formulations such as 'nuclear track can begin within X days of ceasefire.'
- Iran Hormuz moves: does Tehran raise tolls again, offer a partial opening as a goodwill gesture, or hold steady to maintain leverage?
- EU response to flotilla deportations: does Kallas's condemnation produce a formal EU statement or sanctions threat against specific Israeli ministers?
- BRICS: does India break its silence on the war after the failed Delhi ministerial, under pressure from China, Russia and Brazil?
- Houthi operational tempo: any new strikes on shipping transiting the Red Sea or ballistic missiles toward Israel in the next 48 hours?
- Brent price direction: does the weekly close hold near the MTD low or does a stalled Naqvi trip trigger a recovery toward $107–110?
- IAEA: any update on access request to Isfahan underground facility?
Sources: aljazeera.com, reuters.com, theweek.in, scmp.com, yahoo.com, timesofisrael.com, wikipedia.org, stimson.org, carnegieendowment.org, chathamhouse.org, iaea.org, goodreturns.in, shipandbunker.com, travelandtourworld.com, press.jal.co.jp, businessleague.in, nakedcapitalism.com, arabnews.com, newsweek.com, atlanticcouncil.org · fmd-data canonical layer (Yahoo Finance / World Bank / Trading Economics).