The US and Iran are discussing a draft three-page memorandum of understanding, Axios reported. The talks centre on steps linked to Iran’s nuclear programme and a plan described as aimed at ending the ongoing conflict.
Washington is considering releasing about $20 billion in frozen Iranian assets in return for Iran giving up an enriched uranium stockpile estimated at nearly 2,000 kilograms. Axios said some material could be moved to a third country, with the remainder down-blended in Iran under international monitoring.
Discussions also cover a voluntary pause on nuclear enrichment, with the US proposing 20 years and Iran suggesting five years. Axios reported possible further talks this weekend in Islamabad, with Pakistan mediating and support from Egypt and Turkey, while disagreements remain.
Iran’s foreign minister Abbas Araghchi said on Friday that, in line with the ceasefire in Lebanon, all commercial vessels can pass through the Strait of Hormuz for the rest of the ceasefire period.
In markets, the US Dollar Index fell 0.37% to 97.80. WTI US oil dropped 7.70% to $82.70, a low of more than one month.
We recall the market reaction in 2025 when talks of a US-Iran deal sent oil prices tumbling and weakened the dollar. That initial drop in WTI crude to near $82 was based on the hope that open passage through the Strait of Hormuz would become permanent. As we see today, that optimism was premature.
The comprehensive deal discussed last year has not fully come to pass, leaving the market in a state of prolonged uncertainty. While direct conflict was avoided, the underlying tensions remain a key factor for global supply chains. As of April 2026, compliance with the partial agreements is inconsistent, and rhetoric from both sides continues to create headline risk.
For oil derivatives, this means the geopolitical risk premium is firmly back on the table, with WTI now trading around $94 per barrel. Recent data from the EIA shows global inventories have tightened by over 1.5 million barrels per day in the last quarter, making any potential disruption in the Strait of Hormuz even more critical. We believe buying long-dated call options on crude futures is a sensible strategy to position for any sudden escalation in the coming weeks.
The US Dollar Index (DXY), which briefly touched 97.80 during the 2025 de-escalation, is now trading above 105. This reflects a shift in focus from Middle East politics to persistent domestic inflation, which registered at 3.2% year-over-year in the latest March 2026 CPI report. The dollar’s path is now more dependent on the Federal Reserve’s interest rate decisions than on geopolitical headlines.
Ultimately, implied volatility is the asset to watch. The CBOE Crude Oil Volatility Index (OVX), which dipped below 35 during the 2025 talks, has been holding steady above 48 for most of 2026. This indicates the market is pricing in a significant chance of sharp price swings, making it expensive to be short volatility and rewarding for those who own options for protection.
