Enrique Velasco, FX Director at Cecabank
After the ultimatum issued by Donald Trump expired, which included the explicit threat to intensify attacks against Iran and even the destruction of "an entire civilisation", the scenario took a last-minute turn. Just an hour and a half before the deadline set by Washington, the United States and Iran agreed to a two-week provisional truce, mediated by Pakistan and conditional on the reopening of the Strait of Hormuz.
The announcement has been met with immediate relief by global financial markets, which have reacted strongly after weeks of high volatility. Oil prices fell by nearly 15% on Wednesday, the biggest drop in almost six years, reflecting the sharp reduction in geopolitical risk associated with the possible closure of the Strait of Hormuz, through which about 20% of the world's energy supply passes. This move illustrates the extent to which the market had incorporated an extreme scenario that, had it materialised, would have had significant consequences for global inflation and economic growth.
The reaction has also spread rapidly to the entire range of financial assets, reflecting a clear retreat from the more defensive strategies adopted in recent weeks. Stock markets rose across the board that day, while debt markets saw a considerable adjustment, with significant drops in sovereign bond yields.
There was also a significant change in tone in the foreign exchange market. The US dollar corrected downwards, in line with the outflow of safe-haven funds, while other traditionally defensive currencies lost traction. Conversely, Asian currencies showed remarkable strength, reflecting not only a greater appetite for risk, but also the sensitivity of these economies to the stability of international trade.
In this context, the dynamics suggest that the market is beginning to discount a scenario of less sustained tension, although still highly conditioned on the continuity of the political dialogue and the absence of episodes that call into question the fragility of the truce.
However, beyond the initial market reaction, the agreement is far from representing a structural resolution of the conflict. Rather than a definitive closure, the agreement appears to function as a provisional solution that allows both parties to buy time, reduce immediate costs, and build an internal narrative of containment and success. Third-party mediation, such as Pakistan's prominent role, and the start of diplomatic contacts give the situation an appearance of progress, but many essential issues remain open to divergent interpretations.
In practice, the most sensitive element is the management of maritime traffic in the Strait of Hormuz. If the traffic normalises gradually and in a controlled manner, a fait accompli situation could be consolidated, reducing the incentives for a resumption of armed conflict. In this sense, the effective reopening of the energy flow would act as an anchor of stability. However, any disruption, even a limited one, could quickly reverse investor confidence and increase volatility.
At the same time, this dynamic has clear implications for strategic equilibrium. Iran, by maintaining its ability to exert influence over the strait, strengthens its position on the ground, while the United States retains room to reactivate pressure if its objectives are not met at the negotiating table. This equilibrium suggests that the most likely scenario in the short term is not a structural resolution, but a de-escalation sustained by tactical interests, with a fragile balance that will depend on operational decisions, market behaviour, and the stance of regional actors.
From a market perspective, this implies that the current appetite for risk is based more on expectations than on certainties. Investors are beginning to price in a scenario of less sustained tension, but this adjustment remains vulnerable to any diplomatic setbacks or incidents in the strait. The evolution of the negotiations in the coming weeks will be key to determining whether this change in tone will be consolidated or, on the contrary, is merely a pause in the dynamic of uncertainty.
However, it is still too early to assess the true scope of this agreement. High geopolitical uncertainty remains and any diplomatic decision could quickly alter the scenario. However, for the first time in weeks, a path—or at least a direction—towards a possible stabilisation of the conflict seems to be emerging.
