U.S.-Iran peace talks stall. What’s next for global markets

Global markets are entering the week balancing resilient risk appetite against renewed geopolitical strain as prospects of U.S.-Iran negotiations took a hit over the weekend.

U.S. President Donald Trump scrapped plans to send envoy Steve Witkoff and Jared Kushner to Islamabad for talks with Iran on Saturday, citing “tremendous infighting and confusion” within Tehran’s leadership. 

Iran’s foreign minister Abbas Araghchi made a brief return to Islamabad on Sunday as Pakistan’s leaders pushed to revive ceasefire talks between Tehran and Washington, though Trump said discussions could instead take place over phone. Araghchi has reportedly departed Islamabad for Moscow.

Iran has offered a new proposal to the U.S. for reopening the Strait of Hormuz and end the war, while shelving nuclear talks to a later date, Axios reported, citing a U.S. official and two sources with knowledge of the matter.

Amid lingering uncertainty over the critical energy waterway and the Iran war, oil prices inched higher Monday, reinforcing a persistent risk premium in energy markets.

International benchmark Brent oil futures rose around 1% to $106.55 per barrel while U.S. crude oil added 0.88% to $95.23 per barrel.

Goldman Sachs now expects oil prices to stay higher for longer, raising its Brent forecast to $90 a barrel by late 2026 from $80 previously, as disruptions in the Persian Gulf prove more persistent than earlier assumed. 

The bank wrote in a note published Monday that delayed normalization in Gulf exports, now expected only by end-June, alongside a slower production recovery is tightening supply sharply, with global inventories estimated to be drawing at a record pace of 11 million barrels per day to 12 mbd in April. 

The bank’s view is echoed by other market watchers. “I’d argue the fat tail is still ahead of us, not behind,” said Billy Leung, investment strategist at Global X ETFs. Fat tail refers to probability of extreme events.

Even if flows via Hormuz eventually resume, the lag in restoring supply, combined with depleted inventories, suggests sustained tightness. Global investment management firm Invesco estimates that $80 per barrel is likely a floor for Brent this year absent a full normalization of flows.

Experts warned that the longer the strait remains disrupted, the more acute the economic impact becomes, with rising prices eventually forcing demand destruction, particularly in energy-importing regions.

Stocks: resilient for now

Equities have so far shown surprising resilience, with global markets having recouped losses sustained in the initial outbreak of the war, hovering near record highs despite the ongoing energy shock.

Analysts say that this reflects a tug-of-war between geopolitical risks and strong structural drivers, particularly artificial…