Alfred Hitchcock once said that a film should begin with an earthquake and then the tension should continue to rise. The current situation between the United States and Iran shows just how much cinematic potential this conflict contains. Yesterday, media reports suggested that Iranian authorities had ordered enriched uranium to remain inside the country, threatening the prospect of any agreement. President Donald Trump warned that the United States would ensure Iran does not obtain a nuclear weapon, or would have to take “very drastic” steps.
Shortly afterwards, reports emerged about the outline of a preliminary agreement between the two countries, only for the Iranian side to deny them. The talks between the United States and Iran therefore show that room for diplomacy still exists, but the scale of unresolved disputes remains very large. Signals from Tehran suggest that Washington’s latest proposal may have partly narrowed the differences between the two sides, but this does not yet amount to a real breakthrough. The most important points of contention concern Iran’s nuclear programme, the future of enriched uranium, the security of shipping through the Strait of Hormuz and the broader issue of ending hostilities in the region.
The positions of the two sides remain far apart. The United States expects Iran to hand over enriched uranium and suspend enrichment for at least a decade. For Tehran, these conditions are politically very difficult to accept, as confirmed by public statements from Iranian leaders. President Masoud Pezeshkian has declared that Iran will “never back down”, which limits negotiators’ room for manoeuvre and increases the risk that the talks could fail. Donald Trump, meanwhile, continues to put pressure on Tehran, warning that the United States could resume attacks if Iran does not accept American terms. Such rhetoric increases uncertainty, as diplomacy is taking place alongside the threat of further military escalation.
The dispute over the Strait of Hormuz is particularly important. The idea of permanent fees for passage through this waterway is opposed by the United States, as it could raise the cost of transporting crude oil and create a dangerous precedent for global energy trade. Any tension around the strait immediately affects the oil market, as reflected in sharp price swings. Brent crude gained more than 4% at yesterday’s peak, before ending the day down 2.32%, falling below USD 102.60 per barrel. Today it is again above USD 105 and up 2.29%, showing that investors are reacting both to the threat of escalation and to even limited signs of diplomatic progress.
The economic risk remains high because oil prices feed into energy costs, inflationary pressure and weaker sentiment across financial markets. Falling global inventories of crude oil and petroleum products are another source of uncertainty. This means the global commodities market has a smaller safety buffer in the event of a sudden supply crisis.
Israel also plays an important role in the broader picture, remaining sceptical about any possible agreement with Iran. Israeli authorities suggest that Tehran cannot be trusted and that its military potential should be weakened further. This position may make stabilisation more difficult, especially if Israel concludes that diplomacy does not provide sufficient security guarantees and decides to continue military action.
The current stage of the talks should therefore be assessed cautiously. On the one hand, there are signs that dialogue has not broken down and that the US proposal has, to some extent, reduced the distance between the parties. On the other hand, the most important issues remain unresolved, while public declarations by leaders limit the scope for compromise. Until the United States and Iran move closer on the nuclear programme, and as long as tensions around the Strait of Hormuz and Israel remain high, markets will continue to operate in an environment of elevated uncertainty. The greatest economic threat remains a rise in oil prices, which could once again strengthen inflation and increase pressure on central banks and energy-importing economies.
