Key Takeaways

* Oil prices tumble nearly 8% on renewed U.S.–Iran peace deal optimism

* Proposed framework includes gradual reopening of Strait of Hormuz

* Markets price in easing supply disruption risks

* Global risk appetite improves as geopolitical tensions soften

Market Summary

Global risk appetite improved significantly while crude oil prices extended their losses, as optimism surrounding a potential U.S.–Iran agreement became the dominant market catalyst.

According to Bloomberg, the United States and Iran are discussing a fresh proposal aimed at ending the conflict that has disrupted global energy markets and clouded the economic outlook in recent months. Donald Trump is reportedly seeking a pathway to de-escalation after prolonged tensions drove energy prices sharply higher.

Under the proposed framework, Washington has presented a one-page memorandum of understanding that would gradually reopen the Strait of Hormuz and ease the U.S. blockade on Iranian ports. The proposal focuses initially on stabilizing energy flows and reducing military tensions, while more detailed negotiations surrounding Iran’s nuclear program would be postponed to a later stage.

Although no agreement has been finalized, the latest developments have improved market sentiment considerably. Iran is expected to respond to the proposal through Pakistan within the next two days, though Iranian state media has suggested that certain aspects of the framework may still be viewed as unrealistic by Tehran’s leadership.

With markets increasingly pricing in the possibility of a diplomatic resolution, fears surrounding prolonged supply disruption have eased sharply. As a result, crude oil prices slid nearly 8%, reflecting a rapid unwinding of the geopolitical risk premium that had previously supported prices.

Overall, the latest developments have shifted market focus toward the possibility of normalized energy flows and reduced geopolitical tensions, supporting broader risk appetite while weighing heavily on oil prices in the near term.