A Market Perspective on Iran Truce Talks

Amidst rampant talk of a new US peace deal with Iran and the Strait of Hormuz’s reopening, we have a friendly observation: Markets generally move first, before widely expected events. Global stocks’ rise Monday, following news of a potential truce, and the parallel drop in crude oil prices merely extend recent trends, as markets seemingly started pricing in a better future several weeks ago.^[i] Human nature always seems to want to wait for clarity, but we find markets don’t.

Which is a good thing, because whilst both sides herald a deal they reportedly plan sign Friday, details are scant as we write. It appears to amount to a 60-day truce including toll-free passage for all ships in the Strait of Hormuz, buying time for negotiations over Iran’s nuclear programme. That has an encouraging ring, but prior so-called ceasefires didn’t consistently live up to their billing. Nor did prior Strait “reopenings.” Already, based on all the commentary we have read, oil analysts and G7 officials are divided over how long it will take for ships to start crossing freely, given the risk of mines and carriers’ varying levels of risk tolerance. Iranian officials said they have no plans to charge a toll for crossing but may levy a “fee” for services rendered to traversing ships.^[ii] The deal could also fall through before (or even after) Friday’s planned signing.

So when you get down to the nitty gritty, we think it isn’t clear anything actually, fundamentally changed. And markets, which our research finds are efficient and price all widely known information, almost surely know this … and stocks rallied and oil fell more Monday anyway.^[iii]

This isn’t a change, either. Brent crude oil’s wartime closing high occurred 7 April, a fleeting burst to $138 per barrel.^[iv] It has fallen irregularly for the past two-plus months, closing last Friday at $87, which is where it sat about a week into the war.^[v] (Exhibit 1) Global stocks hit their low even earlier, 27 March, and completed its round trip to pre-war highs 16 April.^[vi]

Exhibit 1: Oil Didn’t Wait for Clarity

Source: FactSet, as of 15/6/2026. Brent crude oil spot price, 31/12/2025 – 12/6/2026.

When stocks and oil started recovering, the war still raged. The Strait remained closed. Worst-case scenario projections of the potential global economic effects abounded throughout financial commentary we follow. Warnings of fuel rationing in Europe and Asia were at fever pitch. Inflation chatter and recession warnings were common throughout coverage we read. So-called ceasefires and peace talks didn’t seem to quiet the noise.

But markets seemingly didn’t (and don’t) need less noise. They just needed to do what we think is their day job, pricing events about 3 – 30 months out. When war broke out, we think stocks, oil and gas took a few weeks to price worst-case scenario projections.^[vii] Once they digested it all, we think they started pricing the likelihood that those projections wouldn’t come true. A recovery didn’t appear to require perfection, clarity, an all-clear signal or any other catalyst. Just a gradual, subconscious realisation that the future, somehow, would be better than the grim scenarios dominating headlines in March and early April.

We don’t think this better future ever hinged on peace or an immediate Strait reopening. Adaptation appears to have been enough, like Saudi Arabia and the UAE using pipelines to route more oil to ports outside the Strait.^[viii] And fertiliser and other dry goods producers using truck convoys to get vital resources to the rest of the world.^[ix] Japan finding new oil and gas suppliers.^[x] Record-high US oil exports.^[xi] Europe tweaking its rules to enable airlines there to use US jet fuel.^[xii] Some ships quietly trickled through the Strait, including two Japanese tankers that reportedly traveled toll-free.^[xiii] Gulf nations launched new pipeline projects to curb the Strait’s importance long-term, and the UAE left oil cartel OPEC so it could better support global supply.^[xiv]

To us, it looks like markets made the rational presumption that human ingenuity would find its way around an obstacle, as we find it always does. We think all of these moves bought time for the global economy to keep running while the Strait was blocked. These adaptations are also why we think it is largely beside the point for markets that the Strait may take time to clear even if Friday’s peace deal goes off without a hitch. Oil and gas are already getting where they need to go, and markets likely know it.

To us, this underscores the danger of reacting to volatility and scary headlines. We find market pullbacks are impossible to time on both ends, top and bottom. Like most pullbacks and corrections (sharp, sentiment-fuelled drops of -10% to -20%), the near-correction that erupted as the war began ended without warning, when things still looked bad and fear dominated.^[xv] Anyone waiting for clarity would have missed the 13.9% rally in global stocks from the low through last Friday.^[xvi] We think those are returns one generally can’t get back without taking excessive risk.

If this peace deal goes through and the Strait reopens, that will be nice. We aren’t dismissing it! But we think the main significance here is the lesson this teaches investors, not the news itself. We reckon stocks and oil have spent the last two-plus months showing the importance of looking 3 – 30 months ahead, as markets do, and not getting hung up on daily headlines.