US Strikes Iran Amid Peace Talks; Oil Prices Volatile as Hormuz Deal Remains Elusive
The US conducted 'self-defense' strikes in southern Iran as diplomatic efforts continue in Qatar, with a peace deal not yet imminent despite progress.
What happened, yesterday
- Escalation25 May US forces carried out 'self-defense strikes' in southern Iran, targeting missile launch sites and boats attempting to place mines, according to U.S. Central Command (CENTCOM) spokesman Capt. Tim Hawkins.
- Diplomacy25 May Iranian negotiators, including parliament speaker Mohammad Bagher Qalibaf, traveled to Qatar for talks aimed at a potential deal to end the war, as reported by the Associated Press.
- Diplomacy25 May US President Donald Trump stated on Truth Social that negotiations with Iran were 'proceeding nicely' but warned of renewed attacks if diplomacy failed.
- De-esc26 May US Secretary of State Marco Rubio said a deal with Iran was still possible within days, despite the new American strikes, noting 'some progress made' in talks in Qatar.
- Diplomacy25 May Iran's Foreign Ministry spokesman Esmaeil Baghaei acknowledged understandings on many issues with the US but cautioned that a final agreement was 'not imminent' due to deep differences.
- Escalation25 May Israel's military warned residents of 10 villages in southern Lebanon to evacuate their homes ahead of expected strikes against alleged Hezbollah targets.
- Market26 May China's yuan slipped against the dollar as hopes for a US-Iran peace deal were tempered by the fresh American military strikes.
The story
Amid a fragile ceasefire, the diplomatic landscape remains tense as the US conducted 'self-defense' strikes in southern Iran, targeting missile launch sites and mine-laying boats. These actions unfolded while Iranian negotiators convened in Qatar for ongoing talks, aiming to finalize a broader peace agreement. US President Donald Trump, while acknowledging that negotiations were 'proceeding nicely,' tempered expectations for an imminent deal, warning of intensified military action if diplomacy falters. Secretary of State Marco Rubio echoed cautious optimism, suggesting a deal could still materialize within days. Iran, through its Foreign Ministry spokesman Esmaeil Baghaei, affirmed progress on various issues but stressed that a final agreement is 'not imminent' given the extensive differences, particularly concerning the nuclear issue and sanctions relief. A key aspect of the proposed agreement involves the reopening of the Strait of Hormuz, a vital energy corridor, which remains central to global economic stability. Israel, meanwhile, issued evacuation warnings for villages in southern Lebanon, signaling potential strikes against Hezbollah targets, adding another layer of regional volatility. The interplay of military action and cautious diplomacy defines the current moment, with the global economy closely watching for any definitive resolution on energy flows and regional stability.
Who moved today
| Actor | What changed | Consequence |
|---|---|---|
| US | US Central Command conducted 'self-defense strikes' against Iranian missile launch sites and mine-laying boats in southern Iran. | This action occurred amidst ongoing diplomatic talks, highlighting continued military engagement despite ceasefire efforts and tempering market optimism. |
| Iran | An Iranian delegation, including parliament speaker Mohammad Bagher Qalibaf, traveled to Qatar for negotiations with the US. | While acknowledging progress on many issues, Iran's Foreign Ministry spokesman stated that a final agreement is 'not imminent,' indicating persistent disagreements. |
| Israel | Israel's military issued evacuation warnings for 10 villages in southern Lebanon. | This move signals potential strikes against alleged Hezbollah targets, indicating a possible escalation on the Lebanese front. |
| President Trump | President Trump stated that negotiations with Iran were 'proceeding nicely' but also warned of returning to the 'Battlefront' if a 'Great Deal' is not reached. | His remarks tempered expectations for an immediate breakthrough while maintaining pressure on Iran for a comprehensive agreement. |
| Secretary of State Marco Rubio | Secretary of State Marco Rubio indicated that an Iran deal could still be possible within days, despite recent US strikes. | His statement maintained a diplomatic window, suggesting that ongoing discussions in Qatar could yet yield positive results. |
Energy and gold
Energy markets remain acutely sensitive to developments, with Brent Crude and WTI Crude experiencing significant volatility in the last 24 hours, though both have held a substantial war premium since the conflict began. Henry Hub Natural Gas has seen an upward movement recently, while TTF Natural Gas has shown a slight decrease. Gold, which initially saw a sharp decline since the war's onset, has been relatively stable today. In currency markets, the US Dollar has strengthened against the Russian Ruble and Saudi Riyal over the past day, while the Brazilian Real has shown some resilience. The Korean Won and Indonesian Rupiah continue to experience quiet stress since the war started. US Treasury yields, across the 3-month, 5-year, 10-year, and 30-year maturities, have seen slight declines in the last 24 hours and over the last week, but remain elevated compared to pre-war levels.
| Instrument | Now | 24h | 7d | MTD | Since war | YTD |
|---|---|---|---|---|---|---|
| Brent Crude | 95.94 USD/bbl | -7.3% | -13.8% | -15.8% | +32.4% | +57.7% |
| WTI Crude | 92.36 USD/bbl | -4.4% | -14.3% | -12.1% | +37.8% | +60.9% |
| TTF Natural Gas | 48.68 EUR/MWh | -1.5% | -3.0% | +5.9% | +52.3% | +72.9% |
| Henry Hub Natural Gas | 3.08 USD/MMBtu | +6.0% | -1.0% | +11.4% | +7.8% | -16.4% |
| Gold | 4,530.40 USD/oz | +0.2% | +0.5% | -1.8% | -13.4% | +4.7% |
Currencies vs the dollar
| Pair | Now | 24h | 7d | Since war | YTD |
|---|---|---|---|---|---|
| USD / CNY | 6.786 | -0.1% | -0.4% | -0.8% | -3.0% |
| USD / JPY | 159.160 | +0.1% | +0.1% | +2.1% | +1.8% |
| EUR / USD | 1.164 | -0.0% | +0.3% | -1.4% | -0.9% |
| USD / ARS | 1,399.000 | -0.2% | +0.0% | -0.7% | -3.6% |
| AUD / USD | 0.716 | +0.1% | +0.8% | +0.9% | +6.9% |
| USD / BRL | 4.997 | -0.6% | -1.2% | -2.7% | -8.8% |
| USD / CAD | 1.381 | +0.0% | +0.4% | +1.0% | +0.8% |
| GBP / USD | 1.347 | -0.1% | +0.6% | -0.1% | +0.0% |
| USD / IDR | 17,785.000 | +0.5% | +0.0% | +6.2% | +6.4% |
| USD / INR | 95.418 | -0.3% | -1.2% | +4.8% | +6.3% |
| USD / KRW | 1,505.090 | -0.5% | -0.2% | +5.1% | +4.7% |
| USD / MXN | 17.301 | +0.2% | -0.6% | +0.6% | -3.8% |
| USD / RUB | 71.990 | +2.7% | +1.1% | -6.3% | -9.4% |
| USD / SAR | 3.752 | +2.1% | +1.7% | +0.2% | +0.1% |
| USD / TRY | 45.901 | +0.4% | +0.7% | +4.4% | +6.9% |
| USD / ZAR | 16.341 | -0.0% | -2.1% | +2.7% | -1.5% |
US Treasury curve
| Maturity | Yield | Since war | YTD |
|---|---|---|---|
| US 3M T-Bill | 3.585% | +1bp | +4bp |
| US 5Y Note | 4.256% | +74bp | +53bp |
| US 10Y Note | 4.558% | +60bp | +40bp |
| US 30Y Bond | 5.064% | +43bp | +22bp |
What it costs, today
| Fuel | Benchmark / pump | Driver + passthrough |
|---|---|---|
| Brent Crude | Global benchmark | Brent has held a significant war premium since the conflict's outset, reflecting persistent supply disruption concerns and geopolitical risk. |
| WTI Crude | US benchmark | WTI Crude has also maintained an elevated price, closely tracking Brent and reacting to news regarding Strait of Hormuz stability. |
| Petrol (Gasoline) | 92RON Singapore Gasoline, India FOB | International petrol prices are influenced by crude oil volatility and regional supply chain disruptions, impacting consumer costs in importing nations like India. |
| Diesel | India FOB | Diesel prices reflect the broader energy market's response to supply shocks and increased demand, with high import bills affecting countries such as India. |
| Marine Bunker Fuels (VLSFO, LSMGO, HSFO) | Singapore, Rotterdam, Fujairah | Bunker fuel prices are sensitive to crude oil movements and the heightened shipping risks in key waterways like the Strait of Hormuz, increasing operational costs for vessels. |
| Natural Gas (TTF) | European benchmark | European natural gas prices remain sensitive to geopolitical tensions and any potential impact on global LNG flows, especially those transiting through the Middle East. |
Three ways this might unfold
A comprehensive peace deal is agreed upon, reopening the Strait of Hormuz and addressing nuclear concerns. ~30%
If the US and Iran overcome key sticking points on nuclear issues and sanctions relief in Qatar talks,
- Brent and WTI Crude would likely give back a substantial portion of their war premium.
- Global shipping costs would decrease, easing inflationary pressures worldwide.
- Demand for safe-haven assets like gold could diminish, leading to further price corrections.
- Natural gas prices (TTF and Henry Hub) would stabilize or decline as supply chain risks abate.
- Currencies of oil-importing nations, particularly in Asia, might strengthen.
- US Treasury yields could see downward pressure as risk aversion lessens.
- The overall global economic outlook would improve, potentially leading to increased trade volumes.
- The Saudi Riyal might see reduced pressure if regional stability increases.
Diplomacy collapses, leading to renewed military escalation and further disruption of energy routes. ~40%
If negotiations in Qatar fail and military actions intensify, particularly around the Strait of Hormuz,
- Brent and WTI Crude would surge well above current levels, potentially reaching new highs.
- TTF and Henry Hub Natural Gas prices would experience significant upward pressure due to supply fears.
- Gold would likely regain its safe-haven appeal, seeing sharp price increases.
- Global shipping and insurance costs would escalate dramatically, severely impacting supply chains.
- Currencies of major oil-importing economies would weaken considerably.
- US Treasury yields could see a flight to safety, but also inflationary pressure from energy costs.
- The global economy would face heightened risks of stagflation and recession.
- The Saudi Riyal could face significant depreciation pressure amidst regional instability.
The current state of 'strikes amid talks' continues, maintaining a fragile ceasefire and market volatility. ~30%
If US-Iran talks remain stalled with intermittent military actions and tempered expectations,
- Brent and WTI Crude would maintain their elevated war premium, subject to daily news cycles.
- Natural gas prices would remain volatile, reacting to any perceived shifts in regional stability.
- Gold prices would fluctuate within a range, reflecting ongoing uncertainty but no definitive crisis.
- Shipping costs would remain high due to continued perceived risk in key waterways.
- Major currencies would see continued, but not extreme, stress from geopolitical risk.
- US Treasury yields would likely remain elevated, reflecting persistent inflation concerns and risk.
- Regional economies, especially those dependent on the Strait of Hormuz, would continue to face economic strain.
- FX reserves and gold flows would continue their current diversification trends.
Around the world
| Country | What changed | Deduction |
|---|---|---|
| ๐บ๐ธ United States | Conducted 'self-defense strikes' in southern Iran while also engaging in diplomatic talks. | This reflects a dual strategy of military deterrence and diplomatic engagement to manage the conflict. |
| ๐จ๐ณ China | Its currency, the yuan, slipped against the dollar amid tempered hopes for a US-Iran peace deal following US strikes. | This indicates market sensitivity in China to the ongoing geopolitical tensions and their potential economic impact. |
| ๐ฎ๐ณ India | Secretary of State Marco Rubio made statements regarding the Iran deal while visiting India, and India is a major oil importer impacted by the conflict. | India remains a key diplomatic and economic player, heavily affected by energy market disruptions and regional stability. |
| ๐ธ๐ฆ Saudi Arabia | President Trump linked the Iran negotiations to an expansion of the Abraham Accords, urging Saudi Arabia and other Gulf nations to normalize relations with Israel. | This suggests a US effort to integrate regional peace with a broader diplomatic framework, placing Saudi Arabia at a critical juncture. |
| ๐ถ๐ฆ Qatar | Hosted Iranian negotiators for talks aimed at a potential peace deal. | Qatar is playing a central mediating role in the ongoing diplomatic efforts between the US and Iran. |
Reserves โ who holds what, who is moving
Central banks continue to adjust their holdings, with some notable shifts in gold reserves. Poland and Uzbekistan have been significant buyers, adding to their gold stockpiles, alongside Azerbaijan, Kazakhstan, and China. Conversely, Turkey has been a substantial seller of gold, with Russia also reducing its holdings. Ghana and Bulgaria also saw minor reductions in their gold reserves. Among the top holders of foreign exchange reserves, China continues to lead, followed by Japan and Switzerland. India and the Euro area maintain substantial FX reserves, with Saudi Arabia also holding significant foreign currency assets. These movements reflect ongoing diversification strategies and responses to global economic uncertainties.
Gold reserves โ top 15 holders (tonnes)
| Country | Tonnes | ฮ last reading | Ref |
|---|---|---|---|
| United States | 8,133.0 | โ | 2026-03 |
| Germany | 3,350.0 | โ | 2025-12 |
| Italy | 2,452.0 | โ | 2026-03 |
| France | 2,437.0 | โ | 2025-12 |
| China | 2,313.0 | +7.00 | 2026-03 |
| Russia | 2,305.0 | -22.00 | 2026-03 |
| Switzerland | 1,040.0 | โ | 2025-12 |
| India | 881.0 | +1.00 | 2026-03 |
| Japan | 846.0 | โ | 2026-03 |
| Netherlands | 612.0 | โ | 2025-12 |
| Poland | 582.0 | +32.00 | 2026-03 |
| Turkey | 535.0 | -79.00 | 2026-03 |
| Euro Area | 507.0 | โ | 2025-09 |
| Taiwan | 424.0 | โ | 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 โ 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
Strait of Hormuz Closure โ Global Food Prices โ Social Unrest The closure of the Strait of Hormuz not only impacts oil and LNG, but also disrupts fertilizer shipments, leading to higher food prices globally, which can in turn fuel social unrest in vulnerable nations.
Increased Geopolitical Risk โ Higher Shipping Insurance โ Supply Chain Delays The ongoing conflict and uncertainty in the Middle East elevate geopolitical risk, leading to higher insurance costs for maritime shipping and subsequently causing delays in global supply chains beyond just energy.
Oil Price Volatility โ Central Bank Rate Decisions โ Economic Growth Fluctuations in Brent and WTI Crude directly influence inflation expectations, prompting central banks to adjust interest rates, which then impacts overall economic growth and investment.
US-Iran Nuclear Standoff โ Gold Reserve Accumulation โ De-dollarization Efforts Continued tensions over Iran's nuclear program drive some nations to increase gold reserves as a hedge against geopolitical risk, indirectly contributing to long-term de-dollarization trends.
US Strikes in Iran โ Yuan Weakening โ Chinese Economic Sensitivity US military actions, even 'self-defense' strikes, directly impact market sentiment, causing the Chinese yuan to weaken and highlighting China's economic vulnerability to Middle East instability.
What others are saying
Carnegie Endowment for International Peace (Nicole Grajewski). Nicole Grajewski's research at Carnegie Endowment for International Peace examines Russian and Iranian policies in the global order, with a particular focus on Iran's nuclear decision-making and contestation in the non-proliferation regime.
Carnegie Endowment for International Peace (Yezid Sayigh). Yezid Sayigh of the Carnegie Endowment for International Peace has discussed how ambiguity, mistrust, and differing interpretations by the United States, Israel, and Iran have left the ceasefire fragile, with Lebanon emerging as a key testing ground.
Stimson Center (Barbara Slavin). Barbara Slavin, a Distinguished Fellow at the Stimson Center, has moderated discussions on the post-US election period, exploring compromise or confrontation with Iran, especially concerning its nuclear ambitions.
The Soufan Center. The Soufan Center provides independent, fact-based analysis on the regional conflict, noting that despite a ceasefire, the global humanitarian community has found little relief.
What weโll be watching
- Outcome of ongoing US-Iran negotiations in Qatar
- Any official statements from Iran regarding nuclear concessions or sanctions relief
- Further US or Israeli military actions in the region, particularly around the Strait of Hormuz or Lebanon
- Response from Hezbollah following Israeli evacuation warnings in southern Lebanon
- Market reaction to Monday's US strikes and any new diplomatic announcements
- Statements from G20 nations on energy security or regional stability
- Official confirmation of Iran's World Cup training base move to Mexico
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