US–Iran Nuclear Talks: Market Watch

• Bloomberg, Reuters, and multiple financial outlets confirmed that the US and Iran have reached an understanding on key “guiding principles” during talks in Geneva, aiming to resolve the long-standing nuclear dispute.
• Iranian Foreign Minister Abbas Araghchi clarified that while progress has been made, a final deal is not imminent.
• Despite diplomatic progress, Iran temporarily closed parts of the Strait of Hormuz for military drills, and the US has sent a second aircraft carrier to the region as a military buildup continues.
• Political consultancy Eurasia Group estimates a 65% probability of US military strikes against Iran by the end of April if talks stall.
• Brent crude futures fell nearly 2% on Tuesday to a two-week low near $67 per barrel as hopes of a deal eased supply disruption fears, though prices have since stabilized with Brent trading near $67.63 and WTI near $62.40 as traders weigh the diplomatic progress against the ongoing military posturing.
• Sources: Reuters, Bloomberg.

Cordoba View: While the market has priced out some risk premium on hopes of increased Iranian oil supply, the situation remains highly volatile. The temporary closure of the Strait of Hormuz serves as a stark reminder that Iran retains significant leverage. Things will likely only settle if negotiations lead to a durable agreement that de-escalates military tensions. Since the chance of military action by late spring remains high according to analysts, the risk of supply shocks will probably keep a baseline premium embedded in prices for the near future.