Last week, Israel and Lebanon reached a 10-day ceasefire agreement brokered by the United States. This not only brings hope for ending the conflict between Israel and Hezbollah but also paves the way for nuclear negotiations between the United States and Iran. This marks a significant turning point in the Middle East situation, and this development is expected to ease current tensions in the global energy market and open a window for a broader regional peace process.

The 10-day ceasefire agreement between Israel and Lebanon, and the renewed hope for US-Iran negotiations, mark a significant turning point in the Middle East situation. This development is expected to ease current tensions in the global energy market and open a window for a broader regional peace process. However, due to the deep differences that remain among the parties on nuclear issues, security arrangements, and territorial sovereignty, whether lasting peace can be achieved ultimately depends on all parties demonstrating greater political will and flexibility. The Islamabad talks and the White House leaders' summit in the coming week will be key junctures in determining the direction of the Middle East situation. Global markets are closely watching whether these diplomatic efforts can translate into tangible results.

The Federal Reserve released its latest Beige Book report on Wednesday (April 15), which clearly reflects the complex situation facing the US economy: soaring energy prices due to the Iran war and geopolitical uncertainty have become major constraints on business decisions and economic activity. While economic activity has shown a modest recovery in some regions, weakened consumer resilience, spreading input cost pressures, and a general wait-and-see attitude among businesses indicate that the US economy will continue to face significant challenges in the near future.

As the situation in the Strait of Hormuz continues to evolve, the market fluctuates between relief and renewed caution. Earlier reports confirmed that this important oil bottleneck was "fully open and ready for full passage," easing concerns about long-term supply disruptions.

However, new developments have complicated the situation. Reports indicate that if the US continues its naval blockade, Iran may consider closing the Strait of Hormuz again, warning that such a move would be considered a violation of the ceasefire agreement.

Last Week's Market Performance Recap:

The "Fully Open" Strait of Hormuz Ignites Wall Street! The Dow Jones Industrial Average surged 868 points, and the Nasdaq Composite Index recorded its longest winning streak in 34 years, as U.S. stocks soared across the board after Iran announced the "full opening" of the Strait of Hormuz. This followed a ceasefire agreement announced by Israel and Lebanon, further strengthening market expectations of easing tensions in the Middle East and prompting investors to quickly replenish their risk asset positions. At the close, the S&P 500 rose 1.2% to 7126.07 points, breaking the 7100 mark for the first time in history; the Nasdaq Composite Index rose 1.52% to 24468.48 points, marking its 13th consecutive day of gains, its longest winning streak since 1992; and the Dow Jones Industrial Average rose 868.71 points, or 1.79%, to 49447.43 points. The Russell 2000 also hit a new high, with the small-cap index rising more than 2%, significantly outperforming the broader market.

Last week, gold prices rose before the weekend, breaking through the $4,850 mark, a gain of over 1.50%, as Iran reopened the Strait of Hormuz, easing global inflationary pressures and suggesting a de-escalation of the US-Iran conflict. Energy prices plummeted, with US benchmark WTI crude falling more than 9% and the dollar dropping to a seven-week low. The decline in oil prices boosted gold and fueled market expectations for a Fed rate cut in 2026. The Middle East situation remains a focus for market participants, with the market reacting strongly to news of a possible end to the conflict.

Last week, spot silver prices repeatedly rose, reaching a high of $83.060 per ounce, and are currently trading around $80.800 per ounce. At present, the core fundamentals for silver are: a triple positive factor of macroeconomic interest rate cut expectations, geopolitical risk aversion, and industrial supply-demand gaps, while also being strongly supported by a weakening dollar. However, caution is advised regarding profit-taking at higher levels and short-term volatility caused by hawkish comments from the Fed.

The dollar index fell last week, briefly dipping below 98 to its lowest level since the start of the conflict with Iran, as news of the temporary reopening of the Strait of Hormuz eased recent inflation concerns. Iran's foreign minister stated that the strait is now fully open to all commercial vessels during the 10-day ceasefire. The dollar weakened broadly last week, falling most against the Swiss franc, Australian dollar, Japanese yen, and euro. The dollar index fell about 0.5%, barely holding above 98, and is on track for its third consecutive week of decline.

The euro/dollar pair touched around 1.1850 on Friday before retreating slightly after news that Iran had fully reopened the Strait of Hormuz during the ceasefire in Lebanon. However, Iranian demands and difficult negotiations led market participants to become cautious again, and the dollar strengthened. The yen weakened against major currencies during European trading hours. The dollar/yen exchange rate rose to near 159.50 as Asian currencies faced selling pressure after Bank of Japan Governor Kazuo Ueda warned earlier in the day of high inflation and weak economic growth stemming from the energy crisis. Subsequently, the yen rebounded back above 158.50.

The pound held steady against the dollar's weekly gains around 1.3500 last week. Risk-taking flows propelled the pair higher on news that Iran would fully open the Strait of Hormuz during the ceasefire between Israel and Lebanon. However, further clarification of the demands from Tehran and Washington provided support for the dollar before the weekly close. Last week, the Australian dollar surged to around 0.7200 against the US dollar, as news of improved Middle East relations pressured the dollar and supported risk-sensitive currencies like the Australian dollar. Market sentiment shifted with the announcement that the Strait of Hormuz was now "fully open and ready for full passage." This development eased concerns about prolonged supply disruptions in the global energy market.

WTI oil prices plunged more than 7% last week, briefly falling below $80 a barrel, hitting a near five-week low, after Iranian Foreign Minister Abbas Araqchi announced that the Strait of Hormuz was fully open for commercial navigation during the ceasefire. This move boosted optimism that the most severe global energy supply disruption in recent history might be easing. This statement followed earlier comments from President Trump, who indicated that Iranian concessions could pave the way for a broader peace agreement.

Last week, as the US and Iran signaled a de-escalation, market hopes for a possible resolution to the Middle East conflict surged, sending Bitcoin to its highest level since early February on Friday. The world's largest cryptocurrency by market capitalization broke through the upper limit of its narrow trading range since the outbreak of the conflict in late February, reaching $78,000 for the first time since February 3. During the session, Bitcoin rose as much as 4.1%, touching $78,302.73, before slightly retracing some of its gains.

The yield on the 10-year US Treasury note fell nearly 7 basis points on Friday to about 4.25%, near a one-month low, as news of the temporary reopening of the Strait of Hormuz eased inflation concerns in the short term. Looking at the overall US Treasury market, speculators exhibited strong hedging and bearish sentiment. Net short positions in 5-year US Treasuries increased significantly by 72,816 contracts, reaching a total of 1,625,745 contracts. In the long-term bond market, net short positions in Treasury bonds increased by 15,120 contracts, with ultra-long-term Treasury bonds seeing a surge of 40,440 contracts. Within specific asset classes, 2-year and 10-year US Treasury bonds saw slight short covering, with net short positions decreasing by 8,209 and 23,259 contracts respectively. This suggests that market funds are repricing the path of medium- and long-term interest rates, with selling pressure on 5-year and longer-term bonds significantly higher than on short-term bonds.

Market Outlook for This Week:

This week (April 20-24), global markets will face a dual test of dense data releases and policy maneuvering. From China's LPR interest rate decision to the US's "dreaded data," from the Fed Chair nomination hearings to inflation data from multiple countries, to the rollover of crude oil futures contracts and the progress of US-Iran talks, a series of key events will unfold, directly impacting the pricing logic of various assets. Currently, the hawkish-dove dynamics within the Fed are intensifying, and geopolitical uncertainties are brewing. Investors need to focus on core data and policy signals to accurately grasp the opportunities and risks amidst market volatility.

This week, attention will be focused on whether there will be new peace talks between the US and Iran, and information regarding an extension of the ceasefire; otherwise, the two-week ceasefire will expire next Wednesday.

The German Chancellor will deliver a joint speech with European Central Bank President Christine Lagarde, and the interplay of global policies and data will attract widespread market attention.

It is worth noting that the WTI crude oil futures May contract will trigger a rollover this week. Historical experience shows that approaching delivery can cause fluctuations in contract spreads, and investors need to be wary of trading risks arising from changes in liquidity.

Regarding risks this week:

Geopolitical and policy variables require close attention.

Besides core economic data, investors should be wary of five potential risks:

First, escalating geopolitical tensions between the US and Iran, and regional conflicts globally, could trigger increased risk aversion, benefiting safe-haven assets such as gold and the US dollar.

Second, speeches by officials from major central banks such as the Federal Reserve and the European Central Bank signaling a policy shift, or Kevin Warsh's nomination hearing featuring aggressive policy proposals, could quickly revise market expectations, causing sharp short-term fluctuations in currency and bond markets.

Third, during the WTI crude oil futures contract rollover period, a combination of high inventory levels and insufficient liquidity could lead to abnormal price fluctuations.

Fourth, a renewed escalation of international trade frictions will suppress global risk asset sentiment.

Fifth, unexpected fluctuations in inflation data from various countries could trigger a repricing of central bank policy adjustments in the market.

This week's conclusion:

Uncertainty surrounding the Strait of Hormuz is causing market tension and a weaker US dollar.

As the situation in the Strait of Hormuz continues to evolve, the market is fluctuating between relief and renewed caution. Earlier reports confirmed that this crucial oil bottleneck was "fully open and ready for full passage," easing concerns about a prolonged supply disruption.

However, new developments have complicated the situation. Reports indicate that Iran may consider closing the Strait of Hormuz again if the US continues its naval blockade, warning that such a move would be considered a violation of the ceasefire agreement.

WTI crude oil prices fell sharply to around $83.00 per barrel as the reopening of the Strait of Hormuz eased supply concerns and risk premiums declined. However, prices could still surge suddenly if geopolitical tensions escalate again.

Meanwhile, despite reduced safe-haven demand, gold surged to around $4,865, reflecting continued uncertainty and escalation risks in the Middle East.

In Asia, the People's Bank of China will set the loan prime rate, Japan will release trade data and inflation figures, and will jointly release the Purchasing Managers' Index with India and Australia.

US-Iran Islamabad Talks Break Down; Middle East Situation Faces New Uncertainty

After approximately 40 days of conflict, Iran and the United States held a round of direct talks in Islamabad, the capital of Pakistan, from April 11 to 12, 2026. This was the longest round of talks in recent years, lasting approximately 21 to 25 hours and involving multiple rounds of key delegation meetings, expert group discussions, and text exchanges. Pakistan played a significant mediating role, with both delegations holding closed-door consultations at locations such as the Serena Hotel. During this period, the US negotiating team maintained close communication with US President Trump and his national security team, conducting at least several phone calls.

The talks unfolded in an atmosphere of distrust and mutual suspicion. From the outset, Iran made it clear that a comprehensive agreement should not be expected from a single round of negotiations. This round of talks added topics such as safe passage through the Strait of Hormuz, regional stability, and nuclear-related issues, with the core differences concentrated on key issues. An Iranian Foreign Ministry spokesperson pointed out that while the two sides reached consensus on some issues, their positions remained irreconcilable on two or three crucial points, ultimately resulting in the failure to sign any agreement.

US Position: Proposing a "Final and Best Solution," Emphasizing Inviolable Red Lines

At a press conference in Islamabad, US Vice President Vance stated that the US has demonstrated considerable flexibility and sincerity, clearly outlining its "red lines," including core conditions such as Iran not seeking to develop nuclear weapons and the Strait of Hormuz remaining unobstructed. The US has left a concise understanding as its final offer, awaiting Iran's response. Vance noted that the US team maintained real-time communication with President Trump, Secretary of State Rubio, Secretary of Defense Hergese, and other officials during the negotiations, and thanked Pakistan for its efforts in facilitating the ceasefire.

Vance emphasized that the failure to reach an agreement would have a greater impact on Iran than on the US, stating that the US will continue to uphold its current fragile ceasefire commitments, but if Iran does not accept its conditions, further uncertainty will increase. Trump had previously made strong statements, pointing out Iran's military disadvantage and indicating that he would continue to monitor the situation. The US Central Command simultaneously announced that the US military had initiated mine-clearing operations in the Strait of Hormuz to ensure safe passage through the strait.

Iran Responds: Accuses US of Ambitions and Greed, Emphasizes Its Own Reasonable Suggestions

Iran has a differing interpretation of the negotiation results. A spokesperson for the Iranian Foreign Ministry stated that the negotiations were conducted in an atmosphere of high distrust, and that the US's "excessive ambition" hindered the achievement of a common framework in each round of talks. Iranian media outlets, including Tasnim News Agency, cited sources close to the delegation as saying that the US attempted to salvage its international image through negotiations but was unwilling to lower its excessive demands, making exorbitant demands on core issues. Iran put forward several reasonable suggestions, believing that "the ball is in the US's court" and that the US should take a pragmatic approach to the issues.

Iran emphasized that as long as the US refuses to reach a reasonable agreement, the situation in the Strait of Hormuz will not change, and Iran is not in a hurry to move on to the next round of negotiations. Delegation sources pointed out that the US seems to be looking for an excuse to withdraw from the negotiations, and that Iran currently has no plans to hold another round of talks. The Iranian Foreign Ministry also reiterated that it will continue to maintain close contact and consultation with Pakistan and other regional partners to safeguard its national interests.

Pakistan's Role: Continuing to Promote the Peace Process and Calling on All Parties to Uphold Commitments

Pakistani Deputy Prime Minister and Foreign Minister Dar stated at a press conference that, under Pakistan's mediation, several rounds of negotiations have been held, and the two sides will continue to firmly advance the US-Iran peace dialogue. He thanked the US and Iran for recognizing Pakistan's efforts to facilitate a ceasefire and emphasized that all parties must continue to uphold their ceasefire commitments to prevent further deterioration of the regional situation. Pakistani leaders have met with delegations from both sides multiple times, providing necessary support for the negotiation arrangements.

Subsequent Impacts: Core Disagreements Remain Unresolved, Regional and Global Risks Persist

Following the conclusion of the negotiations, the US delegation and Vice President Vance have left Pakistan, and the Iranian delegation will also leave Islamabad on April 12. The time, location, and specific plans for the next round of negotiations are currently undetermined. Disagreements between the two sides on key issues such as control of the Strait of Hormuz and nuclear rights remain prominent, directly impacting the stability of the global energy market and security in the Middle East.

Meanwhile, two shooting incidents occurred in the United States: a mass shooting occurred in Virginia Beach, Virginia, prompting a large-scale police response; a shooting also occurred at a fast-food restaurant in Union City, New Jersey, leaving multiple people wounded. While these events are not directly related to international negotiations, they reflect the tense atmosphere within American society.

Furthermore, Reserve Bank of New Zealand Governor Anna Brehman announced increased transparency in monetary policy decisions, potentially including public disclosure of voting results, and an increase in the frequency of interest rate decisions starting in 2027. This demonstrates that central banks globally are strengthening policy communication during turbulent times.

Conclusion:

Diplomatic efforts continue, but uncertainties remain.

While the recent Islamabad talks between the US and Iran failed to achieve a breakthrough, neither side has completely closed the door to dialogue. The mediation efforts of Pakistan and other regional powers highlight the importance of multilateral diplomacy. The future trajectory of the Middle East remains uncertain. The security of navigation in the Strait of Hormuz, the sustainability of the ceasefire agreement, and broader regional stability issues will continue to test the political wisdom of all parties. The international community is closely monitoring developments and hopes to resolve differences through pragmatic dialogue to avoid a renewed conflict that could have a greater impact on global energy, the economy, and security.

Cooling demand for the US dollar as a safe haven, coupled with weakening inflation data, suggests the dollar index may continue its correction.

The dollar index, after falling continuously from its high of 100.64 at the beginning of the month, has temporarily stabilized near the 98 level, but the decline has exceeded 2.5%, and the overall rebound has been limited. Market optimism regarding the prospects of the US-Iran talks has weakened safe-haven demand, while weaker-than-expected PPI data has strengthened expectations of further easing, suppressing the dollar's performance. In the short term, although a technical correction has occurred, the rebound momentum remains limited, and overall market sentiment towards the dollar remains bearish. The dollar index may maintain a weak consolidation pattern.

Key Factors Driving the Dollar's Weakness

The core factors driving the dollar's previous weakness stemmed primarily from the combined effects of changing geopolitical expectations and macroeconomic data. Recently, market expectations for a de-escalation of US-Iran relations have continued to rise, with the US signaling a possible resumption of negotiations. US President Trump indicated that negotiations might resume this week, while Vice President Vance pointed to "significant progress" in the first round of talks in Pakistan and hinted at upcoming follow-up consultations. This series of statements significantly improved market risk appetite, thereby weakening the dollar's appeal as a safe-haven asset.

Meanwhile, although uncertainty remains regarding the Strait of Hormuz, the market is more inclined to price in a "controllable conflict" scenario. Against this backdrop, funds have gradually flowed from safe-haven assets to risk assets, and the relatively stable performance of global stock markets has further weakened demand for the dollar.

Macroeconomic Data Has a More Direct Suppressive Effect on the Dollar

Besides geopolitical factors, macroeconomic data has a more direct suppressive effect on the dollar. The latest US Producer Price Index (PPI) was significantly lower than market expectations. Data shows that the PPI rose only 0.5% month-on-month, far below the expected level of 1.2%, while the core PPI rose only 0.1% month-on-month, also below the market expectation of 0.6%. Year-on-year, the PPI was 4%, lower than the expected 4.6%, while the core PPI remained at 3.8%. This data combination indicates that upstream inflationary pressures have eased somewhat.

Some market analysts point out that the weakening PPI data will reduce the necessity for the Federal Reserve to continue raising interest rates, thereby weakening the dollar's interest rate advantage.

The cooling of inflation expectations directly affects the market's judgment on the Fed's policy path. Previously, there were concerns about further tightening of policy, but the current data reinforces the expectation of "policy observation or even a shift to easing." This change in expectations has led to a decline in US Treasury yields, thereby weakening the attractiveness of dollar assets and becoming a key reason for the continued pressure on the dollar index.

A technical rebound demand for the dollar is beginning to emerge.

However, from a short-term perspective, the continuous decline in the dollar index has accumulated certain oversold pressure, and a technical rebound demand is beginning to emerge. Furthermore, geopolitical tensions remain volatile. If negotiations stall or conflicts escalate, the dollar's safe-haven appeal could quickly return, providing support for the index.

From a technical perspective, on the daily chart, the dollar index has broken below a key support level, shifting the overall trend from consolidation to a downtrend. The price continues to trade below major moving averages, indicating a gradually confirmed medium-term downtrend. Currently, the area around 99.50 forms a significant resistance zone, while the 97.50-97.00 range below represents a potential support zone. If the 99 level cannot be effectively recovered, any rebound is more likely to be seen as a technical correction.

In the short term, the dollar index shows signs of stabilizing after a continuous decline, consolidating around the 98 level. Short-term moving averages are gradually flattening, indicating weakening bearish momentum. Momentum indicators are showing signs of a low-level rebound, suggesting a short-term rebound is possible. If the dollar can hold above 98.50, it may further test the 99.00-99.50 resistance zone; conversely, if it falls below 98 again, it may continue its downward trend, heading towards a lower support area. Overall, the short-term outlook is weak consolidation, while the medium-term bias remains bearish.

Conclusion:

The US dollar index is currently in a phase of "bearish fundamentals + technical correction." Easing geopolitical tensions have weakened safe-haven demand, while weakening inflation data has fundamentally shaken the dollar's interest rate support. Although there may be a short-term technical rebound, the upside potential may be relatively limited in the absence of new positive drivers. Future trends will depend on changes in Fed policy expectations and the evolution of the Middle East situation. If risk sentiment continues to improve, the dollar may continue its weak trend; conversely, if safe-haven demand rebounds, the dollar may experience a phase of rebound.

Is gold not an effective hedging tool? Should it be considered an investment asset?

The massive sell-off of gold during the Iran war weakened its status as a defensive hedging tool in investors' portfolios. Observing its correlation with stocks or risky assets reveals that this correlation is not stable. Investors should view gold as an investment asset, not a hedge.

Gold performed poorly during the Iran-Iraq War, plummeting 24% in 20 days.

In the month following the attacks on Iran, gold prices fell from a high of $5,419 per ounce to a low of $4,098, a drop of 25%. Although prices have since recovered significantly from their lows, gold has struggled to build upward momentum as the conflict continues.

Despite gold's poor track record in geopolitical events over the past 30 years, many investors still view it as a tool to hedge against geopolitical risks.

"We can't even say that 70% of geopolitical events will drive up gold prices; the reality is more like a 50/50 chance, as uncertain as a coin toss.

Gold's Multiple Disadvantages: High Volatility, No Yield, High Holding Costs

Even excluding geopolitical shocks like the Iran-Iraq War, gold faces numerous disadvantages. Its volatility is comparable to emerging market stocks, and gold doesn't generate returns. Clearly, over the past two years, investors holding gold may not have been concerned about returns, but holding costs are a factor to consider.

Holding gold to enhance returns is reasonable if it's based on fundamental factors like central bank gold purchases and so-called currency devaluation trading. However, if the belief is that gold can help offset market correction risks, then it's not a particularly reliable tool.

There are still valid reasons to hold gold; its core value lies in asset appreciation.

Despite these disadvantages, there are still ample reasons to hold gold, including long-term demand from central banks seeking to diversify their reserves and reduce dependence on the dollar, and investor allocations to hedge against government debt and rapid money supply growth.

Gold has investment value due to limited supply growth, but it must be clear that gold is an investment asset, not a hedging asset. For investors, gold remains a worthwhile asset in their portfolios, but we need to understand its role—it's more of a return-enhancing tool than a risk management tool. Investment tools.

The market is generally bullish on gold: the upward trend is not yet exhausted, and the pullback is only temporary.

The market has consistently maintained that the gold rally will continue, and any pullback is only temporary. While there are reasonable doubts about whether gold can continue to appreciate, these doubts are unfounded. Over the past five years, gold has experienced a strong surge, with gains exceeding 170%. Many factors have contributed to this, but the biggest driver is likely the new era of geopolitical volatility and polarization, prompting investors to buy the precious metal.

Furthermore, market concerns about currency devaluation, economic growth, inflation, and irresponsible fiscal conditions not fully reflected in sovereign assets have further fueled gold demand. It's no wonder that this precious metal has been a popular investment during periods of market stress. Gold is a favorite asset among investors.

Two Potential Risks to Gold's Rally

Bearish views on gold mainly focus on two areas of risk. First, central banks may halt their recent gold-buying spree.

The biggest driver of gold prices is central banks. Since Russia's war on Ukraine in 2022, net gold purchases have doubled. Following the US freeze on Russian assets, central banks have significantly increased their demand for gold to diversify their reserves and reduce their dependence on the dollar.

Aside from the International Monetary Fund (IMF), the world's five largest gold holders are the United States, Germany, Italy, France, and Russia. "What would happen if this structural demand from global central banks weakened? Worse, what if they chose to sell gold outright?"

This is not without precedent. Between 1999 and 2002, the UK sold more than 50% of its gold reserves through a series of public auctions, diversifying its reserves into foreign exchange. During the same period, Switzerland voted to decouple the Swiss franc from gold. Three months after the UK announced its gold sale, gold prices fell by 13%—equivalent to a drop of approximately $650 at current prices. The sell-off only stopped after several central banks signed the Washington Gold Accord, coordinating and limiting large-scale gold sales that could have impacted prices. This agreement expired in 2019 because central banks had by then largely become buyers, not sellers, of gold.

The second major risk to gold's continued rise is that retail investors may abandon the precious metal.

Don't forget retail investors; they have also been flocking to the gold market. The primary purpose of these new buyers is usually to hedge against rising geopolitical risks and macroeconomic uncertainty.

The rationale for retail investors holding gold: long-term diversification

However, retail investors also have ample reasons to hold or even increase their gold holdings. Besides hedging against short-term geopolitical risks, gold is also a long-term diversification tool. Given its relatively low correlation with other assets, gold can hedge against inflation, outperform other assets during market downturns, and reduce overall portfolio volatility.

Conclusion:

Multiple factors support gold prices rising in 2026

New demand from Chinese insurance giants and the cryptocurrency community last December will drive gold prices higher in 2026.

While the current gold price surge is not, and will not be, linear, the upward trend driving gold prices higher is not over. The long-term trend of official reserves and investor diversification towards gold still has room for further development.

A weaker dollar, lower US interest rates, and economic and geopolitical uncertainties have traditionally been positive factors driving gold prices higher, and these factors have all played a role in the current rally. Furthermore, gold serves as a hedge against currency devaluation and a non-yielding alternative to US Treasury bonds and money market funds.

Why Did Crude Oil Fall Instead of Rising After the Strait of Hormuz Blockade Takes Effect?

Why Did Crude Oil Fall Instead of Rising Despite the Accelerated Second Round of US-Iran Talks and the Implementation of the Strait of Hormuz Blockade? Although the US has implemented a blockade against Iranian vessels in the Strait of Hormuz, international oil prices have not seen a significant rebound due to the limited marginal impact of the blockade on shipping capacity in the Strait of Hormuz and news that a second phase of US-Iran talks is underway.

The US blockade of Iranian ports has officially taken effect, with the US deploying over 15 warships to support the operation. Trump claimed that 158 ​​Iranian naval vessels had been completely destroyed, warning that Iranian fast attack craft would be immediately eliminated if they approached the blockade zone. US Vice President Vance clearly stated the US's red lines in negotiations, demanding that Iran hand over enriched uranium, and stated that the blockade of Iranian oil exports strengthened the US's bargaining power, while the issue of navigation in the Strait of Hormuz would directly influence the direction of negotiations.

Core Logic: The blockade is a "bargaining chip," not a "supply cut-off tactic."

The current US-Iran standoff is essentially about "pressure to force talks": the US port blockade is not intended to completely cut off shipping in the Strait, but rather to use it as a core bargaining chip to advance peace talks—one of the core conditions for US negotiations is Iran opening the Strait of Hormuz. The core objective of the blockade is to pressure Iran and accelerate the negotiation process.

In fact, the Strait of Hormuz had already been effectively paralyzed due to the conflict, with most merchant ships actively avoiding risks. This US blockade has not further impacted the existing navigation situation.

From the perspective of the game's outcome, it's almost a foregone conclusion that Iran will ultimately need to provide a clear explanation to the US regarding uranium enrichment, unless the US concedes militarily. This core trend determines the controllability of geopolitical risks and prevents the market from falling into extreme panic.

Market Impact: Risk Appetite Did Not Deteriorate, Geopolitical Boost to Oil Prices Limited

For crude oil trading, the logic of "blockade urging talks" directly dominated pricing: the blockade did not exacerbate the risk of supply disruptions; instead, it accelerated negotiations. Global market risk appetite did not deteriorate significantly, thus limiting the geopolitical premium that oil prices could obtain.

Although the Strait of Hormuz carries approximately 20% of global seaborne oil trade, and previous conflicts had already pushed up oil prices, the "negotiation tool" nature of this blockade shifted market focus from "supply panic" to "progress in peace talks."

On the one hand, the US blockade focuses on Iranian ports rather than a complete blockade of the Strait of Hormuz, and the oil tanker "Fortune Star" has already broken through the blockade to navigate, indicating that there is room for easing in shipping through the Strait and that the supply side has not substantially deteriorated.

On the other hand, both the US and Iran have expressed a willingness to negotiate, and Pakistan is actively mediating, with expectations for progress in negotiations continuing to rise, further suppressing the extreme upward momentum of oil prices.

Trading Perspective: Anchoring to "Negotiation Progress," Geopolitical Premium Gradually Converging

Currently, crude oil pricing has shifted from being "conflict escalation-driven" to "negotiation progress-driven." The core of trading needs to be adjusted strategies around the dynamics of the negotiations:

If a breakthrough is achieved in the negotiations (Iran opening the Strait of Hormuz + reaching a consensus on the uranium enrichment issue), the geopolitical premium for oil prices will fall rapidly, and the risk of a correction should be noted;

If negotiations remain deadlocked, oil prices will remain volatile at high levels, but lack the momentum for a sustained surge, as the market has fully recognized the "pressure attribute" of the blockade;

Only when negotiations completely break down and the conflict escalates again can a new round of oil price jumps be triggered, but given the current game situation, this scenario is unlikely.

Overall, the US strategy of using blockade to promote peace talks has kept Middle East geopolitical risks within a "controllable pressure" range, and the oil market does not need to over-price extreme supply risks.

In the short term, oil prices are more likely to fluctuate around the current range. The core focus for trading should be on the timing of the US-Iran negotiations and breakthrough signals on key issues (Strait closure + uranium enrichment).

Secondary variable: Limited impact of Israel-Lebanon negotiations, not shaking the core logic

It is worth noting that Israel and Lebanon are scheduled to begin their first direct negotiations in decades in Washington. Although Israel has suspended airstrikes on Beirut, it continues its military operations in Lebanon, while Hezbollah has explicitly rejected the outcome of the negotiations.

However, the direct impact of this branch of conflict on the oil market is limited and unlikely to change the core pricing logic of US-Iran negotiations and the Strait of Hormuz closure. Only short-term disturbances from unexpected spillovers from the conflict need to be monitored; no adjustment to the core trading strategy is necessary.

Conclusion:

The market has strong expectations for a de-escalation of the Middle East conflict—Iran, the US, and Israel are expected to resume negotiations to end the conflict that led to the closure of the Strait of Hormuz. The market seems to be hoping for a better outcome, meaning it has already priced in many of the supply disruptions we've seen.

Crude oil trading remains primarily driven by marginal improvements in the Strait of Hormuz's navigation and the progress of US-Iran negotiations. Currently, there are few marginal changes in the market; instead, there has been a new turning point in the negotiations.

Overview of Important Overseas Economic Events and Matters This Week:

Monday (April 20): US February Building Permits (Preliminary) (%); Canada March Unadjusted CPI (Year-on-Year) (%); German Chancellor Merz and ECB President Lagarde deliver speeches.

Tuesday (April 21): Australia ANZ Consumer Confidence Index for the week ending April 19; UK March Unemployment Rate - by ILO Standard (%); Eurozone April ZEW Economic Sentiment Index; US March Retail Sales (Month-on-Month) (%); US March Seasonally Adjusted New Home Sales (Annualized) (Thousands of Units)

Wednesday (April 22): Japan March Goods Trade Balance - Unadjusted (Billion Yen); UK March CPI (Year-on-Year) (%); UK March Retail Price Index (Year-on-Year) (%); UK March Unadjusted Input PPI (Year-on-Year) (%); Eurozone April Consumer Confidence Index (Preliminary) US EIA Crude Oil Inventory Change (in thousands of barrels) for the week ending April 17

Thursday (April 23): Eurozone April SPGI Manufacturing PMI (preliminary); UK April SPGI Services PMI (preliminary); UK April CBI Retail Sales Balance; US March Durable Goods Orders (month-on-month, %); US Initial Jobless Claims for the week ending April 18 (in thousands); US April SPGI Manufacturing PMI (preliminary)

Friday (April 17): UK April GfK Consumer Confidence Index; Japan March National CPI (year-on-year, %); UK March Seasonally Adjusted Retail Sales (month-on-month, %); US April University of Michigan Consumer Sentiment Index (final)

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