Oil markets have stabilised lower for now and global equity markets have rallied this week on the back of renewed optimism around a deal in the Middle East. On Thursday afternoon, media reports emerged that the US and Iranian negotiators had settled on a Memorandum of Understanding (MOU) that would extend the ceasefire by 60 days, allow renewed talks on Iran’s nuclear program and enable a gradual reopening of the Strait of Hormuz (SOH). The deal is still pending US President’s approval, and Iranian officials have not confirmed media reports. According to US Treasury Scott Bessent Donald Trump’s three “red lines” – reopening the Strait, Iran surrendering highly enriched uranium and ending its nuclear program – remain prerequisites for any agreement.
It appears the two sides are negotiating in good faith and there is indeed strong momentum towards a deal. The devil is in the details, however. The US forces and the IRGC have continued to clash this week, underlining the fragility of the current ceasefire and perhaps signalling that there is also growing impatience on both sides as the talks drag on. We think one of the key sticking points for a deal is the SOH issue. If the US ends its blockade of Iranian ports in exchange for Iran allowing more traffic via the strait, the US also effectively forgoes much of its leverage for the upcoming complex nuclear talks. It is unrealistic to expect that an initial MoU would be able to address all the specifics of Iran’s nuclear program, and more likely that those talks would take time.
We do think it is possible that a compromise can be found in several other issues – such as those related to Iran’s frozen assets, sanctions and even the issue of the highly enriched uranium. Yet, an agreement on these issues hinges on the two sides finding common ground on Iran’s overall ambitions regarding the nuclear program and its ambitions in maintaining a role in the governance of the SOH. As Iranian officials have put it, nothing is agreed until everything is agreed on.
As markets are increasingly optimistic that traffic volumes in the SOH could start normalising soon, Brent oil price has stabilised below USD 100 level this week. Short-term inflation expectations, as well as central bank rate pricing, have fallen in tandem. For the ECB, the market remains convinced that they will hike rates by 25bp in June. The April meeting minutes confirmed this view, and we agree. But the timing for the next hike is more uncertain. We still think the ECB could move already in July especially if there is no deal in the Middle East, but risks are skewed towards a hike later in the autumn. For the Fed, we updated our call recently and now expect them to hike in December, followed by a hike in March next year. Economic growth in the US has surprised on the upside recently, underlying price pressures are building up and due to lower labour supply growth going forward, the economy is more prone to overheating than before.
Next week, focus will remain in the Middle East. Over the weekend, we will get official May PMIs from China, followed by the private RatingDog releases for manufacturing PMI on Monday and services on Wednesday. There has been some divergence lately with the private releases being stronger. On Tuesday, all eyes will be on the EA flash inflation print for May. In the US, key data points will be the ISM releases on Monday and Wednesday, as well as labour market data throughout the week.
Full report in PDF.
Editorial note: This recovered market brief has been cleaned and reclassified by Next Move Markets for educational market intelligence. It is not investment advice.
Next Move Markets desk view
For active traders, this brief should be read through the lens of Middle East and GCC markets rather than as a standalone headline. The key question is whether the theme behind Weekly Focus – Optimism Around Iran Deal Lifts Market Sentiment can influence positioning beyond the first reaction. That means watching energy links, regional policy, currency flows, fiscal themes and geopolitical risk together, not in isolation.
A richer trading read comes from separating the catalyst from confirmation. The catalyst explains why markets are paying attention; confirmation comes from price action, liquidity and cross-asset behavior after the headline is digested. If those signals do not align, traders should treat the move as fragile and keep risk tighter.
What traders should watch next
- Whether local market reaction is confirmed by energy prices and broader risk appetite.
- How regional currencies, sovereign risk and equity benchmarks respond after the first headline.
- Any policy follow-up from government, central-bank or energy officials.
- Cross-market spillover into oil, gold, the U.S. dollar and regional banking sentiment.
Risk context
This article is a market-intelligence brief, not a trade recommendation. Before acting on the theme, traders should define invalidation, position size and the time horizon of the setup. The same headline can support a short-term reaction and still fail as a multi-session trend if liquidity, policy expectations or broader sentiment move the other way.
Scenario map
The base case is that traders keep this theme on the radar while waiting for confirmation from energy links, regional policy, currency flows, fiscal themes and geopolitical risk. A stronger continuation scenario requires follow-through after the first reaction, preferably with related assets moving in the same direction. A failure scenario develops if the headline is quickly absorbed, volatility fades and price returns inside the previous range.
For Middle East and GCC markets, the most useful approach is to compare the article theme with live market behavior. If the market confirms the narrative, pullbacks can become more constructive. If the market rejects it, the headline becomes background noise rather than a trading driver.
Execution discipline
- Define the level first: traders should know where the idea is invalidated before thinking about upside or downside.
- Separate news from setup: Weekly Focus – Optimism Around Iran Deal Lifts Market Sentiment may explain attention, but entry quality still depends on timing, liquidity and risk/reward.
- Watch confirmation: a clean move usually appears across related markets, not only in one isolated instrument.
- Control exposure: if volatility expands, smaller position sizing can be more professional than chasing the headline.
Next Move Markets treats this kind of brief as a starting point for preparation: identify the driver, map the scenarios, then wait for the market to prove which path is actually being priced.
Next Move Markets desk view
For active traders, this brief should be read through the lens of energy markets rather than as a standalone headline. The key question is whether the theme behind Weekly Focus – Optimism Around Iran Deal Lifts Market Sentiment can influence positioning beyond the first reaction. That means watching supply headlines, inventory data, OPEC policy, transport routes and geopolitical risk together, not in isolation.
A richer trading read comes from separating the catalyst from confirmation. The catalyst explains why markets are paying attention; confirmation comes from price action, liquidity and cross-asset behavior after the headline is digested. If those signals do not align, traders should treat the move as fragile and keep risk tighter.
What traders should watch next
- Whether the headline changes physical supply expectations or only short-term sentiment.
- How Brent and WTI react around recent technical ranges after the first volatility spike.
- Inventory data, OPEC communication and shipping-route risk that can confirm the theme.
- Currency moves and global growth expectations that may offset energy-specific catalysts.
Risk context
This article is a market-intelligence brief, not a trade recommendation. Before acting on the theme, traders should define invalidation, position size and the time horizon of the setup. The same headline can support a short-term reaction and still fail as a multi-session trend if liquidity, policy expectations or broader sentiment move the other way.
Scenario map
The base case is that traders keep this theme on the radar while waiting for confirmation from supply headlines, inventory data, OPEC policy, transport routes and geopolitical risk. A stronger continuation scenario requires follow-through after the first reaction, preferably with related assets moving in the same direction. A failure scenario develops if the headline is quickly absorbed, volatility fades and price returns inside the previous range.
For energy markets, the most useful approach is to compare the article theme with live market behavior. If the market confirms the narrative, pullbacks can become more constructive. If the market rejects it, the headline becomes background noise rather than a trading driver.
Execution discipline
- Define the level first: traders should know where the idea is invalidated before thinking about upside or downside.
- Separate news from setup: Weekly Focus – Optimism Around Iran Deal Lifts Market Sentiment may explain attention, but entry quality still depends on timing, liquidity and risk/reward.
- Watch confirmation: a clean move usually appears across related markets, not only in one isolated instrument.
- Control exposure: if volatility expands, smaller position sizing can be more professional than chasing the headline.
Next Move Markets treats this kind of brief as a starting point for preparation: identify the driver, map the scenarios, then wait for the market to prove which path is actually being priced.
