For all the noise we’re seeing in the past few days, the fact remains that the US and Iran are unable to arrange a second meeting in Pakistan. Iran continues to maintain a hard line in saying that they will not want to sit down and talk as long as they are being threatened. In other words, they want the US to break the naval blockade before agreeing to negotiations.
Meanwhile, US president Trump had a lot to say yesterday as he says that he has “all the time in the world” in riding out the conflict. That before adamantly saying that he does not want to be rushed to end the war. As a reminder, Trump initially said that it was just going to take “four to five weeks”. It’s now going to be nine weeks already with no signs of further progress.
Besides that, Trump also pointed the finger to Iran in saying that Tehran’s leadership is in shambles and that they are fighting among themselves. He is saying that the disorganisation in Iran is what is making it tough to seek out a deal right now. In his words: “Iran is delaying because they don’t know who they’re talking to.”
At the same time, he also says that the US is the one now in charge of the Strait of Hormuz. That as he also claims that they are working to clear out mines in the waterway. But as we all know, Iran continues to keep a firm chokehold on the strait. Otherwise, it will be easy enough to see ships pass through if the US was truly the one in charge.
It is clear Trump wants to work an angle to set the scene in order to declare “victory”. But for now, he has to wait for it and so do markets.
As the status quo prolongs, oil prices are continuing to keep firmer as we look to the final day of the week. Brent crude is up 0.6% to $105.70 and WTI crude up 0.3% to $96.16 currently.
On the week itself, we’re seeing a solid rebound in prices as traders start to grow more nervous about the war again. Brent crude is up nearly 17% on the week while WTI crude is up some 16% this week.
Despite that, the broader risk mood has been relatively calm in the past few days; all things considered. The S&P 500 is only down 0.3% this week with the Nasdaq down by just 0.1% after yesterday’s showing. That’s not bad at all when you consider the optimistic rally to fresh record highs last week and the fact that the oil market is acting more jumpy this week.
If anything, there appears to be two diverging views in markets. One is suggestive that there might be something to worry about as the US-Iran conflict continues to drag on. And as such, the reality is that the global economy is being hurt very badly by all of this. The other view is one where investors are wanting to turn a blind eye to the whole situation in hopes for a deal to come at some point
