A Market Perspective on Iran Truce Whisperings

Amid rampant talk of a new US peace deal with Iran and the Strait of Hormuz’s reopening, a friendly reminder: Markets move first. Monday’s 1.7% S&P 500 price return and drop in crude oil prices merely extend recent trends, as markets started pricing in a better future several weeks ago.^[i] Human nature always wants to wait for clarity, but markets don’t.

Which is a good thing, because while both sides herald a deal they will purportedly sign Friday, details are scant. 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 program. That has an encouraging ring, but prior “ceasefires” didn’t consistently live up to their billing. Nor did prior Strait “reopenings.” Already, 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. The deal could also fall through before (or even after) Friday’s planned signing.

So when you get down to the nitty gritty, it isn’t clear anything actually, fundamentally changed. And markets, which are efficient and price all widely known information, know this … and stocks rallied and oil fell more Monday anyway.

This isn’t a change, either. Brent crude oil’s wartime closing high occurred April 7, a fleeting burst to $138 per barrel.^[ii] It has fallen irregularly for the past two-plus months, closing Friday at $87, which is where it sat about a week into the war.^[iii] (Exhibit 1) The S&P 500 hit its low even earlier, March 30, and completed its round trip to pre-war highs April 14.

Exhibit 1: Oil Didn’t Wait for Clarity

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

When stocks and oil started recovering, the war still raged. The Strait remained closed. Worst-case scenario projections abounded. Fears of fuel rationing in Europe and Asia were at fever pitch. Inflation jitters and recession warnings reigned. So-called “ceasefires” and peace talks didn’t quiet the noise.

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

This better future never hinged on peace or an immediate Strait reopening. Adaptation was enough, like Saudi Arabia and the UAE using pipelines to route more oil to ports outside the Strait. And fertilizer and other dry goods producers using truck convoys to get vital resources to the rest of the world. Japan finding new oil and gas suppliers. Record-high US oil exports. Europe tweaking its rules to enable airlines there to use US jet fuel. Refineries globally shifted gears to keep gasoline, diesel and kerosene flowing. Some ships quietly trickled through the Strait, including two Japanese tankers that reportedly traveled toll-free. Gulf nations launched new pipeline projects to curb the Strait’s importance long-term, and the UAE left OPEC so it could better support global supply.

To us, it looks like markets made the rational presumption that human ingenuity would find its way around an obstacle, as it always does. All of these moves bought time for the global economy to keep running while the Strait was blocked. These adaptations are also why 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 know it.

This underscores the danger of reacting to volatility and scary headlines. Market pullbacks are impossible to time on both ends, top and bottom. Like most pullbacks and corrections (sharp, sentiment-fueled drops of -10% to -20%), this spring’s near-correction ended without warning, when things still looked bad and fear dominated. Anyone waiting for clarity would have missed the 15%-plus rally in global stocks since the low.^[iv] Those are returns you 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 pooh-poohing it! But we think the main significance here is the lesson this teaches investors, not the news itself. 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.