US-Iran Explore Phased Agreement to Reopen Strait of Hormuz
US and Iranian negotiators are reportedly exploring a phased agreement to ease the current conflict, with the first stage potentially involving Iran reopening the Strait of Hormuz in exchange for the US ending its economic blockade. A later stage could involve further sanctions relief and access to frozen Iranian assets, according to sources cited by Reuters. However, the arrangement remains under discussion, with both sides still facing obstacles in reaching an agreement.
The development came on the sidelines of the ongoing United Nations General Assembly (UNGA) in New York, where US, Iranian and other world leaders are holding meetings and making statements regarding the conflict. Further diplomatic discussions and remarks during the UNGA could therefore create additional volatility as markets assess the direction of negotiations.
The possibility of reopening the Strait of Hormuz eased concerns over potential disruptions to global oil supplies, putting downward pressure on crude prices. WTI Crude Oil fell around 2.30%, as reduced supply-chain concerns lowered some of the geopolitical risk premium in oil.
Lower oil prices could also ease concerns over energy-driven inflation, potentially reducing expectations for further interest-rate hikes. Against this backdrop, Gold gained around 0.40%, as lower rate expectations provided support for the non-yielding precious metal.
Markets will continue to monitor US-Iran negotiations and statements from world leaders during the UNGA. Progress toward the phased agreement could further ease oil supply and inflation concerns, while a breakdown in negotiations could revive geopolitical and supply risks.
Trump-Xi Summit Delivers No Major Breakthrough
US President Donald Trump and Chinese President Xi Jinping met in Washington on September 24, with discussions covering trade, artificial intelligence, Taiwan and broader geopolitical issues. However, the summit produced no major breakthrough on the key areas of disagreement. The existing US-China trade truce was extended by two months, while major issues including tariffs, rare-earth supplies, technology restrictions and Taiwan remain subject to further negotiations.
With no major new agreement emerging from the summit, market attention remains focused on the ongoing United Nations General Assembly (UNGA) in New York, particularly on developments surrounding the US-Iran conflict. Further remarks from world leaders and developments in US-Iran negotiations could continue to drive volatility across oil, Gold and broader financial markets.
