US-Iran Peace Deal Still Uncertain, But Oil Prices are Falling

Key Takeaways

• Oil Prices Fell on Wednesday as tensions between the US and Iran continue
• Iran announced that a new draft ceasefire deal has been made, which would help reopen the Strait of Hormuz
• The White House denied the peace deal was legit, calling the described memorandum a “complete fabrication“

Despite an uncertain truce and peace deal between the US and Iran to end their war, oil prices are slowly slipping down on Wednesday. Amid small waves of attacking and return fire in the last 72 hours, the temporary cease-fire has for the most part held. As a result, The price of Brent crude fell roughly 3% to around $93 a barrel for August delivery, currently the most heavily traded contract.

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Oil Price Today: Will a Full US-Iran Peace Deal Bring Stability?

The ongoing US-Iran war has caused unrest on a geo-political level and global economic level. One-fifth of the world’s oil supply runs through the Strait of Hormuz. That oil route has been blocked since February. Both the United States and Iran want control over the route, and that is a key component in peace talks. This past weekend, Blocknow reported that US President Trump has reached a deal with Iran that would involve the US submitting control of the Strait to end the war.

Oil prices began to cool after that report. However, Iranian officials later denied that a deal had been reached. In fact, threats later resumed, with the US suggesting that talks between the countries would have to continue “with bombs.” Days later, Iranian state media announced new details of a revised deal. However, the White House is now denying the deal is legit. The price of oil fell again on Wednesday in the US, dropping to $89 a barrel. Here are the proposed details of that new deal:

1. US Military forces will withdraw from Iran
2. The US Navy will lift its blockade of the Strait of Hormuz
3. Iran will restore the number of commercial transit ships through the Strait of Hormuz to pre-war levels within 1 month
4. Military vessels are not included
5. The management and routing of ship traffic through the Strait of Hormuz will be handled by Iran in cooperation with Oman
6. If a final deal is reached within 60 days, this agreement will be approved as a binding UN Security Council resolution

The gas prices in the US could finally cool if this US-Iran ceasefire deal is reached, thanks to the Strait of Hormuz finally reopening.

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How is the Stock Market Reacting to the Latest US-Iran Ceasefire Talks?

As for the stock market, US stocks are wavering amid the uncertainty around the US-Iran war. The AI sector has helped drive the market higher in recent months, however, the war is still weighing heavy on investor sentiment. The Dow Jones Industrial Average (^DJI) rose 0.3%. The tech-heavy Nasdaq Composite (^IXIC) fell 0.3%, and the benchmark S&P 500 (^GSPC) declined by 0.1%, after the major indexes rose to record highs on Tuesday.

As for overseas, stocks in Asia, where countries import vast quantities of oil and gas, were mixed. Shares in Taiwan and South Korea rose about 2%, while stocks in Hong Kong and mainland China were lower. In Europe, the Stoxx 600, a broad-index that tracks the region’s largest companies, posted a 0.3% gain.

The US and Iran want to set a 30-60-day negotiation period for a broader peace deal that could end the war for good. However a starting point needs to be reached first.

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