The ongoing Iran war reached its two-month mark, with significant diplomatic developments emerging as Iran passed a new proposal to the White House via Pakistani mediators. The proposal offers to reopen the Strait of Hormuz and lift the naval blockade first, with nuclear negotiations to follow at a later stage [1][2]. White House press secretary Karoline Leavitt confirmed that President Donald Trump and his national security team discussed Iran's proposal on Monday, which included the condition that the U.S. lifts its blockade and the war ends [2]. U.S. Secretary of State Rubio stated that Iran wants to retain control of the Strait of Hormuz, a condition deemed unacceptable by the U.S. [1]. The White House confirmed that national security officials reviewed the Iranian proposal but maintained red lines, including preventing Tehran from obtaining a nuclear weapon [1].
Market reactions reflected the uncertainty surrounding the geopolitical situation. Oil prices remained elevated, with WTI crude closing up approximately 1.75% to around $94.75 per barrel. The session was marked by volatility: prices surged at the open due to the continued closure of the Strait of Hormuz and the cancellation of President Trump's Islamabad envoy trip, but gains were trimmed as news of Iran's proposal gained wider coverage, introducing caution into long positions [1]. The Strait of Hormuz has been effectively closed for a ninth straight week, with daily transits reduced to near zero [1].
Global equities held near record highs, though the S&P 500 and other indices showed restraint as traders awaited mega-cap tech earnings and five major central bank decisions this week [1][2]. In Asia, the Kospi continued its strong performance, and South Korea overtook the U.K. in total market capitalization, pushing U.K. stocks down to ninth place [2].
German Chancellor Friedrich Merz commented on the situation, stating that the U.S. is being "humiliated" by Tehran's leadership [2]. The diplomatic standoff, combined with upcoming central bank decisions and key earnings reports, contributed to a broadly cautious and event-driven market mood [1][2].
CONCLUSION
Iran's proposal to reopen the Strait of Hormuz has introduced a potential path toward de-escalation, but key U.S. conditions remain unmet, keeping markets on edge. Oil prices remain elevated and volatile, while global equities are holding near record highs amid ongoing geopolitical uncertainty and major upcoming economic events. The situation remains fluid, with market participants closely monitoring diplomatic developments and central bank actions.