USIran

The money-saving expert said earlier in the week that he expected energy prices to drop soon in some rare ‘good news’ for hard-pressed Brits

Martin Lewis says that energy deals are already becoming more affordable following an agreement between the US and Iran. The money-saving expert stated earlier this week that he anticipated prices would fall soon in some rare ‘good news’ for financially stretched British households concerning energy costs.

This followed an announcement of an accord between the US and Iran to cease hostilities and reopen the crucial Strait of Hormuz. The memorandum of understanding, which is now active, was signed on Wednesday by Donald Trump and Iranian president Masoud Pezeshkian.

This has seen the cost of oil and natural gas decline, resulting in a reduction in energy prices. At the time of writing, Brent crude has fallen by approximately $7 a barrel and UK natural gas by roughly 14 per cent.

Mr Lewis confirmed that fixed energy deals were already being made available that were around 5 per cent more affordable. He stated: “Energy fixes have started to get cheaper, now 5% below April price cap.”

However, Mr Lewis cautioned earlier this week that people shouldn’t anticipate a substantial reduction in the next price cap, which runs from October to December.

The next price cap is expected to be announced on August 26 by energy regulator Ofgem. Approximately 60 per cent of households in England, Scotland, and Wales remain on a standard variable tariff, meaning their costs are governed by the price cap.

The current energy price cap is due to increase on July 1 by 13 per cent. This means that a home with typical energy consumption paying by direct debit will face charges of £1,862 annually.

That marks a rise of £221 compared to the previous price cap – and Mr Lewis cautioned it could climb even higher, despite the cessation of hostilities.

He stated: “The US and Iran signing a framework deal has pushed natural gas prices down. These wholesale prices are a key driver of UK gas and electricity bills. As the six-month graph shows, though, prices still have a long way to fall before returning to pre-conflict levels.

“The good news is that this could lead to slightly cheaper fixed tariffs being launched in the coming days. However, without substantial further drops the October price cap still looks likely to be significantly higher than it is today.”

He was subsequently questioned about why he believed the price cap would increase from October. He responded: “It’s the same reason the energy Price Cap HASN’T yet risen due to the Middle East crisis. It is time-lagged. So slow to rise, slow to fall.”

Israeli Prime Minister Benjamin Netanyahu is facing mounting pressure after he was cut out of the US-Iran agreement. Crucially, the Memorandum of Understanding includes Israel’s war on Lebanon. Al Jazeera’s Nour Odeh explains.

Israeli air strikes have continued to target towns in southern Lebanon despite an agreement between the United States and Iran set to be formally signed on Friday to end the war on all fronts.

Israeli drones carried out three attacks in Tyre that resulted in injuries while a drone also targeted the Bint Jbeil district in Nabatieh, Lebanon’s state-run National News Agency said on Wednesday.

The fighting in Lebanon is considered one of the biggest threats to the framework agreement in the US-Israel war on Iran with Tehran warning that new Israeli strikes on Lebanon and continued occupation of its territory would be regarded as a violation of the deal.

Earlier on Wednesday, Al Jazeera Arabic correspondents on the ground reported that Israeli forces carried out an air strike on the outskirts of Kfar Tebnit, also in the Nabatieh district. They also launched raids on the town of Nabatieh al-Fawqa and shelled the Ali al-Taher heights and the outskirts of the town.

Hezbollah fighters, meanwhile, launched at least 10 rockets towards Israeli forces near Kfar Tebnit.

A day earlier, Israeli attacks killed at least four people in Nabatieh, including in drone strikes on several vehicles.

There has been a reduction in violence since the US-Iran agreement was announced, but attacks have not stopped, Al Jazeera’s Zeina Khodr said, reporting from Beirut.

“Security sources believe that the Israeli army is trying to occupy more ground, especially strategic high ground around Nabatieh,” she said.

“Yes, families have started to return to their villages, but people are worried. They say they don’t trust that Israel will abide by the ceasefire.”

United Nations spokesperson Stephane Dujarric said the number of projectiles fired between Israeli forces and Lebanon fell to 174 on Sunday, compared with 705 the previous Sunday.

Of these, 169 were attributed to Israel and five to Hezbollah, he said.

Lebanon ‘most sensitive issue between the sides’

The situation in Lebanon is one of the main pillars of the US-Iran agreement, Al Jazeera’s Almigdad Alruhaid said, reporting from Tehran.

“As we approach the signing of the deal, it is becoming the most sensitive issue between the sides,” Alruhaid said.

Iran said the Israeli military has violated the ceasefire in Lebanon 84 times in the past two days and warned that Israel should expect “a harsh response” if it does not stop its attacks, he reported.

This came after Iranian Foreign Minister Abbas Araghchi said the withdrawal of the Israeli military from Lebanese territory is one of the core demands right now to move forward with the framework agreement Iran has with the US, Alruhaid said: “So the Iranians say the situation in Lebanon, in particular southern Lebanon, is an integral part of the memorandum of understanding.”

Lebanon was among the top priorities for the Iranians when they started negotiations with US President Donald Trump’s administration, according to Mohammad Eslami from Tehran University.

“Once the Iranians not only retaliated against the Israeli attacks on Dahiyeh and Beirut but also pre-emptively attacked Israeli territory, they showed right from the outset they are determined and very serious about supporting Lebanon, the Lebanese people, the Lebanese government and the resistance factions in Lebanon,” Eslami told Al Jazeera.

Israel’s invasion akin to ‘war crimes’

Meanwhile, the human rights group Amnesty International said on Wednesday that the Israeli army’s mass forced displacement orders in Lebanon amount to war crimes under international law.

“In parts of southern Lebanon, the Israeli military’s forced displacement of civilians and prevention of their return amounts to unlawful transfer – which is a war crime,” Amnesty said in a statement.

The Israeli army has “radically expanded” its use of such orders, displacing hundreds of thousands of people across Lebanon, it said.

“Instead of forcibly uprooting communities and designating entire swathes of Lebanese land as ‘no-go zones’ for civilians, Israeli forces must immediately withdraw from Lebanese territory,” said Kristine Beckerle, Amnesty International’s deputy regional director for the Middle East and North Africa.

The Israeli military declared about 4.6 percent of Lebanon as a “no-go zone” on November 28, 2024, a day after a previous ceasefire took effect, Amnesty noted.

This year, just three days after an April 17 ceasefire announcement, the restricted area was expanded to about 6 percent of the country, and residents were ordered not to return to villages previously home to tens of thousands of civilians.

Lebanese officials said Israel, which has been carrying out a large-scale offensive in the country since March 2, has killed more than 3,800 people, wounded 11,850 and displaced more than one million.

Beijing warmly welcomes the peace agreement and memorandum of understanding between the United States and Iran, considering it an important step toward de-escalating regional tensions. China supports the diplomatic path to resolving the crisis, based on a clear strategy aimed at protecting its economic and strategic interests. Beijing emphasizes that a permanent ceasefire, the protection of national sovereignty, the reopening of the Strait of Hormuz, and ensuring the safety of international navigation are top priorities. China contributed behind the scenes to shaping the negotiating framework and influencing Tehran to accept the agreement with the United States in order to safeguard its vital interests in the continued flow of Iranian oil. Accordingly, China officially welcomed the memorandum of understanding between the United States and Iran, affirming that the agreement represents a crucial step toward de-escalating regional tensions. The Chinese diplomatic welcome focused on the key provisions of the agreement, as stated by the spokesperson for the Chinese Foreign Ministry. These provisions guarantee a comprehensive ceasefire, freedom of navigation, energy security, an end to the naval blockade, and the reopening of the Strait of Hormuz to global trade and energy supplies. China considers this essential for its energy and economic security. This agreement, along with the nuclear framework and negotiations, marks the conclusion of the first phase, followed by a 30-60 day negotiation period to discuss the Iranian nuclear program (uranium enrichment and the lifting of sanctions). This Chinese announcement came in support of international mediation efforts ahead of the official signing ceremony in Geneva.

The most prominent points welcomed by China in the US-Iranian agreement, according to announcements and follow-up by Chinese diplomatic channels and as included in the key provisions of the memorandum of understanding, were a cessation of military operations; an immediate and permanent ceasefire on all fronts, including the Lebanese front; freedom of navigation through a commitment to end the naval blockade and open the Strait of Hormuz to global trade and energy supplies; and the nuclear framework, with the conclusion of a phase one agreement stipulating that negotiations on the Iranian nuclear program (uranium enrichment and sanctions relief) would take place within a specified timeframe of 30 to 60 days following the signing.

China has played a pivotal, often unacknowledged, role as a diplomatic bridge between Tehran and Washington to protect its strategic and economic interests in the Middle East. The dimensions of China’s behind-the-scenes role include ensuring the flow of energy. Beijing seeks to maintain stability in the Gulf region to guarantee the uninterrupted supply of Iranian oil and to protect its interests and investments in the Belt and Road Initiative. Iran represents a crucial geographical and strategic hub in China’s ambitious Belt and Road Initiative. To this end, Beijing has sought to leverage its strong economic ties and strategic partnership with Tehran to persuade it to make flexible concessions during critical times, while offering support to avoid military escalation. Beijing fears that the collapse of diplomatic channels could lead to a regional war that would jeopardize its extensive investments in the region.

On the other hand, Beijing seeks to counterbalance American influence. China prefers a negotiated framework between Tehran and Washington that limits American unilateral hegemony and positions itself as a responsible international player capable of peacemaking. China’s vision for diplomatic balancing between Washington and Tehran is shaped by several key strategic axes, most importantly (establishing the principle of a political settlement). Here, Beijing consistently emphasizes that dialogue is the only solution to the Iranian crisis, rejecting military escalation that harms the security of navigation and global trade. This is coupled with regional and international networking, where China supports parallel diplomatic efforts, such as Pakistani mediation. Beijing maintains continuous communication with the parties to the crisis to ensure the opening of indirect negotiation channels that prevent a full-scale confrontation and safeguard vital interests. China has maintained the flow of Iranian oil while simultaneously strengthening its extensive economic partnerships with the Gulf states, granting it unique diplomatic weight and influence that Western powers lack. Despite this notable progress, Beijing faces ongoing challenges due to US containment policies. China rejects Washington’s classification of its major technology companies as military entities and threatens retaliatory measures, making Beijing’s attempts to create a strategic balance with the United States an extremely delicate and sensitive process.

Based on the preceding understanding and analysis, we can see how successful Beijing has been in transforming escalating tensions in the Middle East into strategic gains. China has played an active mediating role by supporting diplomatic talks and the memorandum of understanding for peace between Washington and Tehran, thus positioning itself as a responsible international power seeking to establish stability and move away from unilateral hegemony.

The US-Iran memorandum of understanding expected to be formally signed in Switzerland on Friday could allow for the establishment of a $300bn investment fund for Iran, as part of a broader settlement to end the war that triggered a global energy crisis and upended markets worldwide.

US Vice President JD Vance told CBS News on Monday that the incentives would be connected to Iran’s “performance” in adhering to the deal, which was digitally signed by both sides on Sunday.

The scale of the financial incentives grabbed the headlines due to US President Donald Trump’s longstanding criticism of a 2015 nuclear accord that he claimed delivered economic benefits to Tehran.

In a bid to manage perceptions around this politically sensitive issue, Trump took to his Truth Social platform to claim that “the story that the US is paying Iran 300 million Dollars is Fake News,” while Vance told CBS News that the money would not be a US payout in exchange for Iran’s enriched uranium.

“When people say that billions of dollars of assets will be released, that’s not true,” the vice president told the CBS Morning programme. “What is true is that Iran will have a much better and much more prosperous future if they meet the obligations they make in this agreement.”

What do we know about the $300bn investment fund?

Vance said the deal “fundamentally extends a hand to Iran and says, ‘Look, if you guys are willing to honour your obligations, if you’re willing to allow real inspections of your nuclear programme, then we will welcome you back into the world economy.’

“That’s the sort of thing they could have access to, funded by the Gulf Coast coalition, so long as they honour their end of the obligation,” Vance told CBS. He also claimed that while US money would not be injected, economic opportunities could arise once Iran repositions itself in the global economy.

The New York Times quoted sources saying the fund would not come from governments but be created for companies eager to invest in Iran.

Muhanad Seloom, a non-resident senior fellow at the Middle East Council on Global Affairs, said the setup was a no-lose solution for Washington. “If Iran reforms, the administration owns the peace; if it doesn’t, the US loses nothing and the Gulf carries the risk,” he told Al Jazeera.

What about the Iranian frozen assets?

Seloom said the idea of an investment fund was built precisely to escape the optics of releasing Iran’s frozen funds. While the exact amount of Iran’s frozen assets is unclear, official Iranian reports and experts have set the total amount at more than $100bn.

Iran’s economy has been crippled due to years of sanctions imposed on the country by the United States and other nations following the Islamic revolution in 1979, and then amplified over Iran’s nuclear and ballistic missiles programmes. These measures have restricted Tehran’s ability to access its own assets, such as revenues from oil sales, which have been frozen in foreign banks.

Tehran was granted sanctions relief in the wake of the landmark 2015 nuclear deal signed under President Barack Obama, but Trump tore it up in 2018 during his first term. The 2015 deal had put limits on Iran’s nuclear enrichment in exchange for sanctions relief.

Iran’s state-affiliated Mehr News agency reported on Sunday that the 14-point draft memorandum of understanding provided for the release of $24bn in frozen Iranian assets.

Pressed by CBS News on the possibility of releasing frozen funds, Vance said the $24bn figure “just doesn’t appear anywhere in any of the texts that we’ve talked about with the Iranians”.

“What we have said is that we’re willing to talk about unfreezing assets, but a much, much bigger deal is unsanctioning their economy – so long as they make the long-term commitments on the nuclear programme,” the vice president added.

For Iran, where the war inflicted an estimated $29bn damage and the population is struggling with the highest inflation rate since 1942, the investment fund may constitute a much-needed lifeline.

But the optics will not be as favourable, raising a “dignity problem”, Seloom said. “Tehran reads this as supervised, conditional money rather than sovereign relief,” the analyst told Al Jazeera.

Which other contentious issues will be discussed after signing the deal on Friday?

One of the US’s main declared objectives has been to assuage concerns surrounding Iran’s nuclear programme, including a stockpile of more than 440kg (970lbs) of enriched uranium.

The memorandum extends an existing ceasefire arrangement for another 60 days, during which the two sides are expected to hold further negotiations on issues including the disposal of the enriched uranium.

Vance said Tehran had agreed to surrender its stockpile, undergo regular inspections and refrain from producing or buying nuclear weapons, but the full text of the memorandum of understanding has yet to be disclosed.

The reopening of the Strait of Hormuz, which has been subject to competing blockades by the US and Iran, has also been a point of contention. Trump suggested an agreement to reopen the waterway had been reached when he announced a deal on Sunday with the words: “Let the oil flow!”

Speaking to CNBC, however, Vance acknowledged that not all sticking points surrounding the passageway had been resolved. “Well, our expectation is that the strait is gonna be opened in a toll-free way for the long term, and that’s the sort of thing that we’re gonna figure out in these technical negotiations,” he said.

Israel’s ongoing aggression on Lebanon is also expected to create friction, as Iran has insisted any ceasefire deal must include the allied nation. Israel has so far rejected any arrangement that would limit its ability to strike what it says are Hezbollah targets. Defence Minister Israel Katz on Friday said the military would continue operating in Lebanon regardless of any agreement with Tehran.

Mixed reactions to the agreement

Iranian ⁠⁠Foreign ⁠⁠Minister Abbas Araghchi said the memorandum of understanding would reap economic benefits for Iran but stressed that Tehran would not rely on those benefits for all of its needs.

“We have a history of broken promises, non-compliance, and the tearing up of agreements,” Araghchi said on Monday, according to Press TV. He said discussions about the lifting of US sanctions and Iran’s nuclear programme would be held during a 60-day period of negotiations following the official signature on Friday.

Iran’s new supreme leader, Mojtaba Khamenei, has yet to comment. Some Iranian observers objected to the timing of the announcement, which coincided with Trump’s birthday. Referring to the assassination of former Supreme Leader Ayatollah Ali Khamenei at the beginning of the US-Iran war, conservative journalist Parisa Nasr wrote on X: “Was giving a birthday gift to the killer of the martyred Leader also one of the unwritten conditions of the deal?”

Iranian President Masoud Pezeshkian said Iran’s Supreme National Security Council had approved the deal so that “America’s genuine commitment to respecting the rights of the Iranian nation could be tested in practice.”

Speaking at the G7 summit in France on Tuesday, Trump described the deal with Iran as “fair”, “good”, and under which Iran “can’t have a nuclear weapon” or “they get blown up.”

Qatar’s Emir Sheikh Tamim bin Hamad Al Thani, who is also attending the summit, said the Iran-US agreement will result in positive outcomes for the region.

“This is a very important deal, there’s still a lot of work to be done, but with this momentum – if we continue like that, Mr President – I think we can achieve and do great things in the region,” Sheikh Tamim said.

US Democratic lawmakers welcomed a deal to halt the war with Iran but stressed that its terms must be made public. Senator Gregory Meeks said “any final agreement must be durable, enforceable, transparent” and more than “vague announcements or political spin”.

US Republican Senator Lindsey Graham on Sunday said he was “pleased” about the deal but also “somewhat concerned that Iran’s view of the agreement seems different than what the American negotiating team is claiming”.

Seloom, at the Middle East Council on Global Affairs, said the different narratives underlined that the two sides were “not really talking to each other”. “They’re talking past each other, to domestic audiences,” he said. “Each side has to sell this as a victory it cannot sell honestly.”

Benchmark S&P 500 rises 1.7 percent, while tech-heavy Nasdaq jumps 3.1 percent.

US stocks have rallied on hopes that the tentative deal to end the US-Israel war on Iran will restore stability to energy supply chains roiled by months of disruption in the Strait of Hormuz.

The S&P 500 rose 1.7 percent on Monday, taking the benchmark index within touching distance of its all-time high.

The tech-focused Nasdaq Composite jumped 3.1 percent, aided by a 19.6 percent gain by SpaceX, which on Friday made the biggest market debut in history and minted the world’s first trillionaire in Elon Musk.

The blue-chip Dow Jones Industrial Average climbed 0.9 percent, closing at a record high.

Brent crude futures, the primary benchmark for global oil prices, fell nearly 5 percent to just above $83 a barrel, the lowest price since the first week of the conflict.

Asian stock markets were largely flat on Monday morning, after surging the previous day on the back of US President Donald Trump’s announcement of his deal with Tehran.

As of 01:30 GMT, Japan’s benchmark Nikkei 225 was 0.01 percent lower, while South Korea’s Kospi, the best-performing major index this year, was down 0.06 percent.

In Taiwan, the TAIEX was up 0.2 percent.

Hong Kong’s Hang Seng Index was down 0.07 percent.

Jay Goldberg, a senior analyst for tech-related equities at the Chicago-based Seaport Research Partners, said the announcement of the US-Iran deal had tilted investors’ risk balancing act towards buying into the market.

“To oversimplify, the debate has been: AI spending is strong, but there’s a war going on,” Goldberg told Al Jazeera.

“The war is over, it seems, so that side of the argument falls away. Investors are now feeling better about taking on more risk,” Goldberg said.

While Washington and Tehran’s framework has raised hopes for a return to stability in global energy markets, it is expected to take months before energy flows fully return to normal, due to the massive backlog of vessels around the Strait of Hormuz and the need to ensure the waterway is safe from Iranian naval mines.

According to the International Shipping Chamber, about 500 ships are still waiting to pass through the strait, which normally carries about one-fifth of global supplies of oil and liquefied natural gas.

The preliminary deal to end US-Israel war on Iran has sent oil prices tumbling to a three-month low amid hopes that the Strait of Hormuz will reopen.

But it could be months before American consumers see major relief at the petrol pump.

The closure of the strategic chokepoint disrupted global energy markets for more than three months, cutting off a major shipping route through which roughly one-fifth of the world’s oil and liquefied natural gas normally passes.

On Sunday, US President Donald Trump said prices would “drop like a rock” once the strait reopens, a claim he has made multiple times in the past few weeks.

However, experts caution that a major decline in prices is unlikely to happen as quickly as Trump suggests.

While Asian markets rely more heavily on oil shipped through the Strait of Hormuz than North American markets, tighter supply and steady demand have pushed prices higher worldwide.

On Monday, petrol prices in the US remained above $4 per gallon (3.78 litres), averaging $4.06 nationwide, according to the American Automobile Association (AAA). This was a dip from a high in early May of $4.48 per gallon.

By comparison, prices stood at $2.98 per gallon on February 28, when the US and Israel first struck Iran, triggering a ripple effect across global energy markets.

Energy prices have risen sharply in the US in recent months, increasing 7.7 percent over the last two months alone, and are up 40 percent from a year ago, according to last week’s inflation report from the Labor Department’s Bureau of Labor Statistics,

However, prices are beginning to fall, a dip that began as Washington and Tehran entered negotiations.

“The potential deal that the US and Iran agreed to over the weekend certainly could pave the way for even lower prices… in the next two to three days by what we saw over the weekend,” Patrick De Haan, head of petroleum analysis at GasBuddy, which tracks petrol prices, told Al Jazeera.

But De Haan expects a plateau and says that consumers may not see gas prices at pre-war levels until 2027, even if the ceasefire holds.

“It may take many months, if not beyond a year, for global oil inventories to recover to pre-war levels,” De Haan said.

Amid strains on the supply chain, producers will also need time to ramp up output, while port bottlenecks and heightened demand during the busy summer travel season could delay any substantial relief for everyday consumers.

“There are some mitigating factors that are going to slow the decline in prices. There are a lot of organisations and companies that have to re-up their stockpiles [like the US’s strategic petroleum reserve] and fulfil contracts that have been on hold for the last few months,” John Deal, managing director of capital markets at the Post Oak Group investment bank, said.

Supply chain strains

Fixing kinks in the supply chain takes time.

Oil production slumped amid the war. More than 14 million barrels per day, or 14 percent of the world’s demand, has been shut, according to the International Energy Agency.

Deal said it would take time to get oil production back online.

“My sense is that there’s going to be sustained high demand through the summertime, and we probably won’t get back to pre-war levels [on petrol prices] until after the summer, maybe September or October,” Deal said.

Mark Jones, a professor of political science at Rice University, said that producers might be reluctant to bring full operations back online until they can see the ceasefire hold.

The agreement opening the blockade is for a 60-day negotiation period between the two countries.

“Many [producers] may be reluctant to restart production until they are convinced that the peace will hold, because the last thing they want to do is carry out the costly effort to restart production only to see the conflict revived and then have to shut it down once again,” Jones told Al Jazeera.

Getting production back online is also dependent on the impact individual producers have faced throughout the war.

Refineries that were shut as a precaution could reach as much as 95 percent capacity within 40-60 days, Vitol Bahrain’s head of research, Bader Nooruddin, told the Reuters news agency. Those damaged in the fighting could take much longer.

But bottlenecks at ports could be the biggest hurdle, according to Deal.

“There’s a lag time with shipping capacity. Shipping capacity is perhaps the most significant constraint,” Deal said.

This is because there are more than 500 ships still awaiting passage, according to shipping data from Kpler.

With the ships headed all over the world, it will take them weeks to reach their destinations, dock, and unload at the ports.

That also means a wave of empty ships is waiting in limbo for spots at ports to load cargo and ramp back up to normal operations.

Major shipping giants are in a holding pattern.

Norway’s Wallenius Wilhelmsen and Denmark’s Maersk both told Reuters that they have not changed their Middle East operations in the wake of the announcement.

During the war, there was limited passage through the Strait of Hormuz, with an average of 10 ships a day passing through, compared with 135 that normally transit the waterway, according to an analysis by Bloomberg.

“Tankers take months to reach their final destination and then come back again. So the ability to replenish the stocks is going to take until, I think, the early fall, just from a shipping perspective, to get back to the status quo that was in place before the conflict started,” Jones said, referring to the preferred term for the months of September through November in North America.

At the same time, US strategic reserves are running low, at their lowest levels since 1983. Reserves have tumbled by 18 percent since the war began.

“Demand might keep prices high through the summer as strategic reserves get refilled,” Deal added.

Jet fuel demand will also put pressure on consumers amid the normally busy JuneAugust travel season in the US.

“The war has really affected airlines and their ability to schedule and anticipate how the summer months are going to go,” Deal added.

In April, United Airlines CEO Scott Kirby said that airfares for the carrier may have to jump as much as 20 percent on higher fuel prices.

Grocery woes

The increase in prices is also hitting food budgets.

The most recent consumer price index report showed US inflation ticked up by 4.2 percent compared with this time last year. While inflationary pressures were mostly driven by fuel prices, the impact has still been felt at the grocery store.

Almost half of the world’s urea, which is used in fertiliser, is produced in the Gulf region and passes through the Strait of Hormuz. For American farmers, that means access to fertilisers for the next crop season is more expensive.

Tomato prices, already driven up by Trump’s tariffs on Mexico, have surged 40 percent in the last year amid rising transportation costs.

Lettuce prices rose by more than 16 percent in May, and the price of ground beef increased by about 12 percent compared with this time last year.

Jones warned that food prices may not go down.

“Many retailers, wholesalers, and producers will keep them where they are or only reduce them if forced to from a sales perspective. Unlike petrol, which tends to ebb and flow with the price of oil, prices for many other goods that have been adversely affected by all of this are much less likely to return to where they were prior to the start of the conflict,” Jones said.

“For groceries, for manufacturing goods, for anything that has gone up during the conflict, the price that is there now often becomes the new baseline from which prices move in the future.”

This can be compared with the COVID-19 pandemic period. When the pandemic stalled supply chains, producers increased prices. A 2024 investigation by the Federal Trade Commission found that retail grocers kept prices elevated after supply chain constraints brought on by the pandemic had eased.

“Some in the grocery retail industry seem to have used rising costs as an opportunity to further raise prices to increase their profits,” the report said.

The announcement of a preliminary US-Iran agreement has generated cautious optimism in Lebanon, where months of conflict have displaced large portions of the population and devastated communities across the south.

While the framework reportedly calls for the immediate cessation of military operations, Lebanese authorities are warning residents against assuming that conditions are safe enough for a rapid return.

The caution reflects uncertainty over how the agreement will be implemented and whether all parties will abide by its terms.

Adding to those concerns, Israel has made clear that it does not consider itself bound by the agreement and intends to maintain security zones in southern Lebanon.

Lebanon became one of the principal battlegrounds of the wider regional conflict after Hezbollah opened a front against Israel in support of Iran following the outbreak of hostilities.

The resulting escalation led to extensive Israeli military operations across southern Lebanon, causing widespread destruction and one of the largest displacement crises in the country’s recent history.

Entire communities were uprooted as residents fled bombardment and military activity.

Iran consistently pushed for any agreement with Washington to include provisions addressing Lebanon, viewing the conflict there as inseparable from broader regional tensions.

The inclusion of Lebanon in the framework agreement therefore represents a significant diplomatic concession and a central element of Tehran’s negotiating position.

Why This Matters

Lebanon has become one of the clearest examples of how regional conflicts can produce devastating humanitarian consequences.

The conflict has:

• Displaced more than a million people.
• Damaged homes, infrastructure, and businesses.
• Increased pressure on Lebanon’s already fragile economy.
• Deepened political and social instability.

A durable ceasefire could allow reconstruction efforts to begin and reduce the risk of further regional escalation.

However, the humanitarian benefits will depend on security conditions improving on the ground rather than merely on diplomatic declarations.

The Challenge of Returning Home

For displaced families, peace announcements do not automatically translate into confidence.

Many residents remain uncertain about:

• Whether military operations have truly ended.
• The presence of Israeli forces in southern areas.
• The condition of homes and infrastructure.
• Future security guarantees.

The hesitation expressed by displaced residents reflects a broader reality in conflict zones: trust often takes much longer to rebuild than physical infrastructure.

Even if active fighting stops, communities may remain reluctant to return until they believe the risk of renewed conflict has genuinely diminished.

Israel’s Position Complicates the Picture

A major obstacle to immediate normalization is Israel’s position.

Israeli officials have indicated they will continue maintaining security zones and reserve the right to conduct operations they deem necessary for national security.

This creates ambiguity regarding implementation of the broader agreement.

While the US-Iran framework may establish a diplomatic foundation for reducing violence, the practical situation on the ground will depend on decisions made by actors who were not direct participants in the negotiations.

This distinction could prove crucial in determining whether the agreement produces lasting stability.

A Test of Regional Diplomacy

The inclusion of Lebanon in the agreement demonstrates how interconnected Middle Eastern conflicts have become.

The war was never confined solely to the United States and Iran. It involved multiple regional actors, proxy groups, and overlapping security concerns.

As a result, success will be measured not only by whether Washington and Tehran uphold their commitments but also by whether the agreement influences behavior across the broader region.

Lebanon is likely to become one of the first and most visible tests of that process.

Key Stakeholders

• Lebanon and its government institutions
• Displaced Lebanese civilians
• Israel and its military leadership
• Hezbollah
• Iran
• The United States
• Regional mediators including Pakistan
• Humanitarian organizations operating in Lebanon

What to Watch Next

• Whether military activity in southern Lebanon decreases in the coming days.
• Israeli decisions regarding security zones.
• Hezbollah’s official response to the agreement.
• The pace of civilian returns to southern communities.
• International support for reconstruction and humanitarian assistance.
• Broader negotiations during the 60-day ceasefire period.

The agreement creates an opportunity for Lebanon to move toward greater stability after months of destruction and displacement.

If implemented successfully, reduced hostilities could pave the way for reconstruction, humanitarian relief, and the gradual return of displaced populations.

Yet significant uncertainty remains. Security concerns, damaged infrastructure, and competing interpretations of the agreement could slow progress and complicate efforts to restore normalcy.

For many Lebanese families, the end of active conflict would represent only the beginning of a much longer recovery process.

Analysis

The most revealing aspect of Lebanon’s reaction is the disconnect between diplomacy and reality.

International leaders may celebrate ceasefires and framework agreements, but people living through conflict judge peace by different standards. They look not at official statements but at troop movements, security conditions, and whether it is safe to return home.

That gap is already visible in southern Lebanon. While diplomats describe the agreement as a breakthrough, local authorities are warning residents against rushing back. Israel’s decision to maintain security zones further reinforces uncertainty about how quickly conditions can normalize.

This highlights a recurring challenge in conflict resolution. Agreements can stop wars on paper, but rebuilding trust often takes far longer than negotiating a ceasefire.

Lebanon’s experience may therefore become a key measure of whether the US-Iran agreement delivers meaningful change beyond diplomatic symbolism. If displaced communities can safely return, reconstruction begins, and violence declines, the agreement will gain credibility. If insecurity persists despite the deal, questions will quickly emerge about its effectiveness.

Ultimately, Lebanon represents the human dimension of the broader regional settlement. The success of the agreement will not be judged solely by geopolitical outcomes or energy markets but by whether ordinary people feel secure enough to rebuild their lives after months of war.

With information from Reuters.

The preliminary memorandum represents the first formal framework outlining how Washington and Tehran intend to move from military confrontation toward diplomacy.

While many details remain unpublished, statements from U.S., Iranian and Pakistani officials provide a broad outline of the deal’s structure.

Rather than resolving every dispute immediately, the agreement establishes a phased process aimed at reducing tensions first and addressing more difficult issues later.

The approach reflects the reality that both sides were able to reach consensus on ending hostilities more easily than on the underlying disputes that fueled the conflict.

Phase One: Ending the Fighting

The first stage focuses on immediate de-escalation.

According to mediator Pakistan, both sides have agreed to permanently halt military operations across all fronts.

The formal memorandum is expected to be signed in Switzerland, after which implementation would begin.

The objective of this phase is straightforward: stop active hostilities, reduce the risk of escalation, and create space for broader negotiations.

This represents the most immediate achievement of the agreement and is likely the reason markets reacted positively.

Reopening the Strait of Hormuz

The reopening of the Strait of Hormuz is arguably the agreement’s most significant economic provision.

The waterway serves as one of the world’s most important energy transit routes and has been at the center of global concerns throughout the conflict.

Both sides indicate that commercial shipping will resume following the signing of the memorandum.

The restoration of maritime traffic could:

• Increase global oil supply.
• Reduce shipping disruptions.
• Ease pressure on energy prices.
• Lower inflation risks for major economies.

However, questions remain over how the route will be governed.

Iran has suggested it will coordinate management of traffic with Oman, potentially giving Tehran a more formal role in overseeing one of the world’s most strategically important waterways.

That issue could become a future source of diplomatic friction.

The Nuclear Issue Has Been Deferred

The most controversial subject in the negotiations remains unresolved.

Rather than settling the nuclear dispute immediately, both sides appear to have agreed to address it during a 60-day negotiation period.

According to Iranian officials, Tehran would freeze nuclear activities during that time by halting additional enrichment and refraining from expanding facilities.

The long-term future of Iran’s nuclear infrastructure remains unclear.

Washington continues to emphasize inspections and preventing Iran from acquiring a nuclear weapon.

Tehran continues to insist that its nuclear program is peaceful and seeks recognition of its right to maintain civilian nuclear activities.

These competing positions are likely to dominate the next phase of talks.

Sanctions Relief Could Shape the Success of the Deal

Economic issues may ultimately prove as difficult as nuclear negotiations.

Iran expects meaningful sanctions relief as part of any final settlement.

Iranian officials have spoken about:

• Temporary waivers on oil sanctions.
• The release of frozen assets.
• Financial support mechanisms.
• A pathway toward lifting U.S. and international sanctions.

The Trump administration has signaled a more cautious approach.

Washington has indicated that sanctions relief will depend on Iranian compliance and future negotiations rather than automatic implementation.

This difference highlights one of the central tensions in the agreement: each side expects benefits on different timelines.

Lebanon Remains a Flashpoint

The agreement’s treatment of Lebanon illustrates how regional conflicts have become intertwined.

Iran views a ceasefire in Lebanon as a critical component of the broader settlement.

Lebanese political leaders have welcomed the inclusion of Lebanon in the framework.

Israel, however, has made clear that it does not consider itself bound by all aspects of the agreement and intends to maintain military positions in areas it views as strategically important.

This creates uncertainty about whether the Lebanon component can be implemented as envisioned.

The issue could quickly become one of the first tests of the agreement’s durability.

Why This Matters

The memorandum matters because it shifts the conflict from the battlefield to the negotiating table.

The agreement addresses several immediate concerns:

• Rising energy prices.
• Shipping disruptions.
• Escalating regional instability.
• Growing economic uncertainty.

At the same time, it leaves the most difficult questions unresolved.

This means the framework should be viewed as the beginning of a diplomatic process rather than its conclusion.

Its success will depend on whether negotiators can transform temporary understandings into binding commitments.

Key Stakeholders

• United States
• Iran
• Pakistan (mediator)
• Israel
• Lebanon
• Oman
• European powers
• Gulf Arab states
• International energy markets
• Global shipping industry
• International Atomic Energy Agency (IAEA) and nuclear inspectors

What to Watch Next

• Formal signing of the memorandum in Switzerland.
• Reopening of the Strait of Hormuz.
• Progress during the 60-day negotiation period.
• Discussions on Iran’s nuclear program.
• Decisions regarding sanctions relief.
• Reactions from Congress and international partners.
• Israeli actions in Lebanon and other contested areas.

The memorandum creates a framework for de-escalation, but its long-term success remains uncertain.

If implemented effectively, the agreement could stabilize energy markets, reduce regional tensions, and create momentum for broader diplomatic engagement.

However, many of the issues that triggered the conflict remain unresolved.

Nuclear enrichment, sanctions, regional security arrangements, and competing strategic interests are all likely to generate difficult negotiations.

The coming 60 days will therefore be more important than the announcement itself.

They will determine whether the framework becomes a durable peace process or merely a temporary pause in a conflict whose underlying disputes remain intact.

Analysis

The structure of the agreement reveals a pragmatic calculation by both Washington and Tehran.

Rather than attempting to solve every dispute at once, negotiators prioritized issues where agreement was achievable: ending active hostilities, reopening shipping routes, and creating a mechanism for future talks.

This approach reflects the political realities facing both governments.

For President Trump, reducing energy prices and ending a costly conflict addresses growing domestic pressure. For Iran, halting military operations while preserving room to negotiate on sanctions and nuclear issues offers a path to economic relief without immediate capitulation.

Yet the framework’s greatest strength may also be its greatest weakness.

By postponing the hardest questions, the agreement creates momentum for diplomacy but also leaves significant room for disagreement later. Nuclear enrichment, sanctions relief, and regional security arrangements are not peripheral issues—they are the core disputes that drove the conflict.

As a result, the memorandum should be viewed less as a peace treaty and more as a diplomatic bridge. It lowers immediate risks and creates opportunities for negotiation, but it does not yet resolve the strategic rivalry between the United States and Iran.

Whether this becomes a historic breakthrough or a temporary truce will depend on what happens after the signatures are placed on the document. The real negotiations are only beginning.

With information from Reuters.

Governments across the world have welcomed the tentative deal between the US and Iran to end the war, calling it a major diplomatic breakthrough. But Israeli politicians have been quick to criticise it, claiming it would undermine Israel’s security.

Israeli journalist Gideon Levy says the US-Iran announcement represents a personal defeat for Prime Minister Benjamin Netanyahu and his ambitions against Iran and Lebanon. His relationship with US President Donald Trump could also be at risk if Israel jeopardises the deal.

The US and Iran say they have reached a deal to end fighting on all fronts and open the Strait of Hormuz. Al Jazeera’s Osama Bin Javaid explains how both sides are claiming victory, even as tough negotiations over the details still lie ahead.

The US-Iran ceasefire announcement has raised hopes in Lebanon, after Pakistani mediators claimed it included an end to Israel’s war on the country. But as Al Jazeera’s Heidi Pett explains, we’ve been here before.

Dan Perry: The US ‘may pretend’ that Israel can’t attack Hezbollah ‘in order to get this deal done’. Israeli affairs analyst Dan Perry explains how the US, Israel and Iran may react as they get closer to a potential agreement.

Henry Ensher, a former US ambassador, says the US–Iran agreement is not a final settlement but only the start of a process, with many ways it could still go wrong.

The Washington institution cut its global growth forecast by 0.4 percentage points to 2.5 percent, citing surging energy prices, inflation and borrowing costs.

The conflict in the Middle East is set to bring global economic growth to its slowest since the COVID-19 pandemic, the World Bank has warned.

In its latest Global Economic Prospects report, published on Thursday, the Washington-based institution cut its global growth forecast for 2026 to 2.5 percent from the 2.9 percent it had predicted in January, citing surging energy prices, rising inflation and higher borrowing costs.

The report highlights the significant economic costs of the conflict, which is at risk of flaring up again, as the fragile ceasefire between the United States and Iran is tested on both sides.

The analysis warns that the outlook could decline further if supply disruptions worsen. Iran’s closure of the Strait of Hormuz – a vital passageway for oil and gas transit – in response to the hostilities launched by the US and Israel has put huge stress upon global energy and other supply chains.

The World Bank estimates that Brent crude prices — the international oil benchmark — will average $94 a barrel this year, 36 percent above last year’s average. Fertiliser prices are forecast to increase significantly this year, with knock-on effects for food prices.

Overall, the closure of the strategic waterway will help to push global inflation to 4 percent this year, a substantial increase from last year’s rate of 3.3 percent.

However, the World Bank cautions that global growth could plummet to as low as 1.3 percent this year, should energy supply disruptions worsen, with inflation pushing to 4.4 percent.

The World Bank report also cautions that developing countries are on the front line of the potential impact.

In its report, the institution has downgraded its growth forecasts for two-thirds of countries since January. Global growth is expected to improve to 2.8 percent in 2027, but will remain 0.4 percentage points below the average during the 2010s, during which the world economy was recovering from the global financial crisis.

Excluding China and India, the report worries that developing countries have made little progress towards narrowing their per capita income gap with wealthy nations over the past decade.

“Developing countries have faced a series of challenges over the last decade,” said Ajay Banga, president of the World Bank Group. “The impact differs by country, but the basic test is the same: protect people and preserve stability today, without giving up on growth and jobs tomorrow.”

The World Bank is pledging to assist any developing country experiencing the economic fallout of the Middle East conflict. The organisation says it has set aside up to $60bn to help. It added that if the conflict persists, it can increase its support to $100bn.

The eruption of the Middle East war in 2026, which began with strikes led by the US and Israel against Iran under Operation Epic Fury, carries devastating consequences for recovery, development and regional stability. The assassination of senior Iranian figures, most notably Supreme Leader Ayatollah Ali Khamenei, Iran’s closure of the Strait of Hormuz, the involvement of Hezbollah and Houthis in support of Iran, alongside Iranian attacks on neighbouring countries, further escalated the crisis. The war transformed from a military confrontation into a broader regional political, diplomatic and economic crisis.

While global attention focused on military escalation, oil markets and the Strait of Hormuz, far less attention was given to the war’s humanitarian consequences, despite the massive and irreversible impacts. The conflict has triggered new waves of displacement across an already fragile region. However, there were no meaningful strategies to protect or to facilitate aid efforts to sustain the lives of displaced people, further exacerbating the life-threatening risks facing affected populations.

The displaced of the 2026 Middle East war

The Middle East was already carrying one of the world’s largest displacement burdens before this escalation, mainly due to the Syrian, Palestinian, Afghan and Iraqi refugees and internally displaced populations. The recent war has deepened these vulnerabilities by displacing millions more across Iran and Lebanon. The speed and scale of displacement reflect the severity of the humanitarian crisis unfolding in the region, overwhelming already strained humanitarian response efforts.

In Iran, the war intensified existing economic fragility and internal tensions while placing enormous pressure on state institutions not only to govern but also to effectively respond to the displacement crisis, a critical condition to maintain stability and prevent further chaos.

The displacement of over 3.2 million people has posed a serious challenge for the Iranian authorities. It has affected over 20 provinces, while the damage of 82,000 civilian infrastructure sites, disrupted essential services and attacks on healthcare have severely undermined the living conditions of displaced people.

Although figures fail to precisely capture the devastating realities experienced by displaced populations, they reflect the scale of vulnerability facing civilians forced to flee amid insufficient aid efforts and collapse of health, shelter and education systems.

Lebanon presents an even more fragile case, already affected by protracted conflict, sectarianism, the Beirut Port explosion and economic paralysis. While it was already hosting 1.4 million Syrian refugees and around 250,000 Palestinian refugees, the war has now led to the internal displacement of 1.3 million Lebanese civilians—one in five of the total population— with children accounting for a third of those displaced. The large-scale and ongoing displacement in the country has generated enormous needs, detrimentally affecting various areas of civilian life. While over 3,000 have been killed and more than 9,000 injured, around 130,000 people remain displaced in collective shelters, experiencing extremely difficult conditions. The plight of displaced populations in Lebanon is worsened by ongoing attacks on healthcare, lack of services and the destruction of the housing sector, in addition to limited access to education, where hundreds of schools are either closed or used as collective shelters.

Humanitarianism subordinated to hard politics

Efforts have been made to address the needs of displaced communities. These include government-led actions in Iran to, for example, address psychosocial and shelter needs and the work of local organisations and international agencies in Lebanon. Yet such efforts remain far from adequate, mainly due to the absence of serious international political will to prioritise civilian protection and displacement prevention.

Instead, regional and international actors continue to prioritise deterrence, strategic alliances, military positioning and regional influence over humanitarian protection. By the end of April, the Pentagon had reportedly spent $25bn on its war on Iran, with other estimates showing greater costs—ranging between $630bn and $1 trillion—amid US President Donald Trump’s request for an additional $1.5 trillion for defence. This is evident in how the US paused a $14bn arms sale to Taiwan to ensure its military readiness to face Iran. Iran’s resilience against these attacks and the use of drones—costing tens of thousands of euros—have pushed the US to dedicate more resources to the war. The use of financial means from both sides solely for war objectives while overlooking the humanitarian responsibilities exposes the extent to which military objectives have been prioritised over humanitarian response.

Even ongoing diplomatic efforts between Washington and Tehran reveal the extent to which humanitarian concerns remain secondary and completely neglected. The peace negotiations have largely focused on issues related to hard politics. These include Iran’s nuclear programme, the reopening of the Strait of Hormuz and Iran’s frozen assets under US sanctions, with all these elements mainly addressing the security, financial and economic implications of the war.

The absence of the displacement crisis from peace agreements and negotiations reveals the deficiencies posed by the international human rights and humanitarian regimes. They underscore a reality where human lives continue to be shaped not by principles of protection, but by the strategic interests of powerful states.

This transformed the plight of affected populations in Iran and Lebanon from a humanitarian concern into a tolerated byproduct of geopolitical strategy.

Implications for future generations: The way forward

The humanitarian consequences of this war will not end when the war ends. Long-term displacement carries profound risks for future generations in Iran and Lebanon through collapsing health systems, interrupted education, intensifying social fragmentation and deepening poverty and dependency on international aid. Thus, the failure to protect displaced populations today risks producing future instability across the region. Addressing this requires tailored humanitarian interventions, international responsibility—especially from the US and Iran as the primary conflicting states—towards affected populations and the adoption of prevention strategies in future wars.

The international community, conflicting parties and international organisations must take practical yet realistic—acknowledging the centrality of self-interest during wars between states—steps towards addressing this issue. Without international responsibility sharing and collaborative efforts, the already-fragile international humanitarian system fails to continue functioning as the primary response mechanism, especially amid the growing humanitarian funding cuts due to the occurrence of other “national priorities”. Therefore, the US and Iran, alongside the international community, must dedicate resources to lead a comprehensive emergency response to alleviate the impacts of war on affected communities. This has to begin with protection-centred diplomacy, where the plight of displaced populations is prioritised among other key areas in the peace agreements.

Equally important is the stricter implementation of international legal frameworks to protect civilian populations during armed conflicts through accountability measures for violations against civilians. The role of international organisations and UN agencies is decisive in these matters, given their expertise and international positionality—though shrinking—when it comes to humanitarian missions and peacekeeping. Such efforts must revolve around promoting, integrating and imposing the adoption of humanitarian safeguarding standards for civilians in military and political decision-making. If displacement continues to be treated as collateral damage rather than political responsibility, the Middle East will keep producing generations of displaced people, serving the interests of regional and global powers.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.

Markets betting a deal will reopen the Strait of Hormuz and soothe the deep global economic uncertainty cast by the closure of the vital oil & gas route.

The United States stock market has been hovering near record highs and oil prices have plunged amid new hope that a ceasefire deal between the US and Iran is close.

The rally came on Wednesday as negotiations continued between Washington and Tehran, with markets betting that a deal would reopen the vital Strait of Hormuz, easing oil and gas supply concerns and soothing the deep uncertainty afflicting the global economy.

Oil prices declined sharply after Iran’s state broadcaster said it had obtained a preliminary document outlining a framework for a potential deal.

The price of US crude fell 5.5 percent to settle at $88.68, while Brent crude, the international oil benchmark, decreased to $92 after prices traded above $100 last week.

The report suggested that Iran would allow traffic through the strait at pre-war levels within 30 days. It added that the US would lift its naval blockade on Iranian ports.

Prices remained subdued even after the White House dismissed the report as a “complete fabrication”.

The S&P 500 rose 0.1 percent and added to its all-time high set the day before. The Dow Jones Industrial Average was up 243 points, or 0.5 percent, with an hour remaining in trading, and the Nasdaq composite was 0.1 percent higher.

Wednesday is far from the first time markets have rallied amid reports of a possible end to the war, only to slump once more as negotiations fail to deliver a resolution.

However, the strength of the current surge reflects statements over the past week that suggest the two parties may be closer than ever to reaching a deal.

President Donald Trump said during a cabinet meeting on Wednesday that US officials were not yet satisfied with the agreement, “but we will be”.

“I think they’re starting to give us the things that they have to give us,” he said. “And if they do, that’s great, and if they won’t, then the man on my left will have to finish them off,” he said, pointing at Defense Secretary Pete Hegseth.

Sticking points

It remains unclear whether the two parties have come to an understanding on the major sticking points, including the fate of about 440 kilogrammes (970lbs) of highly enriched uranium; Iran’s nuclear infrastructure, which the US has long insisted it wants to see dismantled in its entirety; Tehran’s ballistic missiles and its support for armed groups in the region.

It is also not clear whether a halt in hostilities in Lebanon would be part of a deal. Iranian officials have repeatedly said that any agreement would have to include that. However, Prime Minister Benjamin Netanyahu this week ordered the Israeli military to step up its attacks against Hezbollah.

There are also questions on whether Washington would agree to lift its sanctions against Iran and release millions in frozen assets.

Brent crude edged 2.5% higher on Tuesday and seems to have steadied around $100 per barrel at the time of writing, as US-Iran negotiations stall.

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On the other hand, WTI dropped over 4% and is trading around $92.6 per barrel.

Overall, oil prices were declining since last Wednesday as the framework for a peace deal, or at least a longer and more encompassing ceasefire, between the US and Iran was seemingly on the verge of being agreed.

However, Iran accused the US of breaching the current ceasefire after Washington carried out what it described as defensive strikes in the southern part of the country.

Iran’s foreign ministry stated that the US attacks in the Hormozgan province, where Iranian media reported hearing explosions early Tuesday, amounted to a “serious violation” of the fragile ceasefire that has been in effect for almost seven weeks.

Meanwhile, US Secretary of State Marco Rubio said negotiations aimed at ending the conflict could require “a few days” to reach an agreement.

On Monday, US President Donald Trump also reiterated nuclear demands in a social media post, as tensions continue to surround the fundamental aspects of a possible agreement.

Investors appear to have mixed reactions to the developments with some markets seeming to price in a decrease in the probability that a deal is imminent.

In Europe, the Euro Stoxx 50 has fallen more than 0.7% while the broader pan-European Stoxx 600 is trading around 1% lower as we approach the close of Tuesday’s session.

The UK’s FTSE 100, Germany’s DAX 30, France’s CAC 40, Italy’s FTSE MIB, the Netherlands’ AEX and Switzerland’s CH20 have all dropped between 0.1% and 0.7%.

Over in Asia, Japan’s Nikkei 225 and Taiwan’s TAIEX closed flat, but South Korea’s KOSPI jumped 2.5% primarily driven by a continuous demand for AI-related equities.

However, US markets appear completely decoupled from other indices and the broader situation. Not only have WTI prices continued to fall on Tuesday but the S&P 500 also opened 0.6% higher.

Latest on the Strait of Hormuz

Both the US and Iran had signalled headway toward a memorandum of understanding that could end the conflict and resume maritime traffic through the blocked Strait of Hormuz, while allowing negotiators a 60-day window to tackle more complicated matters such as Iran’s nuclear activities and supplies.

In his latest remarks, US Secretary of State Marco Rubio stated that the Strait of Hormuz must remain accessible “one way or the other” as traffic through the chokepoint has dropped sharply, with only a few dozen ships currently using the route each day, compared with the usual 125 to 140 vessels.

Iran has continued to permit limited shipping, prioritising vessels connected to allied or friendly nations and arranging passage through state-to-state agreements.

Continuous reports of attacks in the Strait of Hormuz underscore how far from the normalisation of energy flows and other supplies the global economy still is.

On Tuesday, the United Kingdom Maritime Trade Operations (UKMTO) reported that a tanker experienced an external blast near the waterline on its port side.

According to the agency, the vessel was located about 60 nautical miles from Muscat, the capital of Oman.

UKMTO said the tanker and all crew members were unharmed, although a quantity of bunker fuel spilled into the sea.

This is the most recent reported incident near the Strait of Hormuz at the time of writing.