U.S., Iran talks hopes revive markets

Hopes for another round of U.S.-Iran talks helped calm markets after days of oil spikes and stock-market nerves. (investopedia.com) (cnbc.com) President Donald Trump said on April 15 that the war was “very close to over” and told the New York Post that talks with Iran could take place in Islamabad, Pakistan, within days. Oil traders reacted first: U.S. crude fell nearly 8% on April 14 before settling at $91.29 a barrel on April 15, while Brent closed at $94.93. (cnbc.com) The diplomatic track had already started once. Al Jazeera reported that U.S. and Iranian delegations held more than 20 hours of talks in Islamabad on April 11 and 12, with U.S. Vice President JD Vance and senior Iranian officials discussing Iran’s nuclear program, sanctions relief, frozen assets and the Strait of Hormuz. (aljazeera.com) Those talks ended without an agreement, and the ceasefire that followed was described as fragile. Reuters reported on April 20 that markets turned defensive again after the United States said it had seized an Iranian cargo ship and Iran said over the weekend it would not join a second round of negotiations, though a senior Iranian official later said Tehran was considering sending representatives to Islamabad. (usnews.com) That back-and-forth explains why markets have swung so sharply. Reuters said U.S. crude jumped 6.9% to $89.61 a barrel on April 20 and Brent rose 5.6% to $95.48 as fears returned over the Strait of Hormuz, while the S&P 500 fell 0.2% and the Nasdaq dropped 0.3%. (usnews.com) The Strait matters because it is a narrow shipping lane for roughly a fifth of the world’s oil and gas trade. The International Energy Agency said reopening flows through Hormuz was the most important variable for easing pressure on energy supplies and the global economy. (cnbc.com) Even with talk of diplomacy, the physical disruption has not disappeared. Goldman Sachs told clients that flows through the strait were still running at about 10% of normal levels, or roughly 2.1 million barrels per day, on a four-day moving average. (cnbc.com) The shock has spread beyond energy desks to airline counters. CBS News reported that average domestic round-trip airfare in the United States was $358 as of April 13, up 18% from a year earlier, while average international economy fares were up $115 to $1,064. (cbsnews.com) Airlines are also adjusting schedules and fees. CBS said United Airlines planned to cut summer flight volume by 5%, and Chief Executive Scott Kirby said the carrier had raised fares by 15% to 20%; CNN reported that carriers were also canceling routes they no longer considered profitable. (cbsnews.com) (travel.yahoo.com) For investors, that leaves a narrow trade: buy the prospect of talks, but keep pricing in a supply shock. Until Washington and Tehran turn Islamabad from a possibility into an actual meeting, oil, airlines and equities are likely to keep moving on every headline. (cnbc.com) (usnews.com)