Pakistan: US and Iran close to a peace arrangement or a deal

Pakistan says Washington and Tehran are inching toward a framework to end the war and reopen the Strait of Hormuz, a headline that immediately pulled the bid out of crude.

What Pakistan said

“Things are shaping up again in favor of a peace arrangement or a deal,” Pakistan’s defense minister Khawaja Asif told Bloomberg News in Islamabad on Tuesday, adding that “the signals in the last two three days are that we are close to some sort of an arrangement.”

Asif framed the progress as being over the Strait of Hormuz, even after both sides appeared to harden their positions in the long-deadlocked negotiation.

Why the market cares

Roughly a fifth of global oil and liquefied natural gas flowed through Hormuz before the war, and the stalemate has in effect blocked the vital waterway. Any credible reopening path is a direct hit to the war-premium in crude.

Oil prices erased gains following Asif’s comments, the latest in a long run of conflicting statements. Traders are treating each headline as a fade until there is signed paper.

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The diplomatic track

Iranian Foreign Minister Abbas Araghchi met Pakistani Interior Minister Mohsin Naqvi in Tehran on Tuesday, according to Araghchi’s Telegram channel.

Qatar’s Foreign Ministry spokesperson said separate discussions between Oman and Iran over management of the Strait of Hormuz were at an advanced stage.

The risk the tape is ignoring

Despite tentative signs of progress in diplomacy, there were reports of new attacks on shipping in the Gulf of Oman and the Red Sea. A Panama-flagged container vessel named Vela Nova was struck by a missile fired from a US helicopter off the coast of Pakistan after its crew ignored warnings from personnel working to enforce a naval blockade on Iranian ports.

A Houthi missile attack on a commercial vessel in the Bab el-Mandeb strait Tuesday killed four crew members and wounded four others, according to Yemen’s Saudi-backed transport ministry. The ship, the Tihamah, which was carrying food supplies, was struck by three ballistic missiles. Three Pakistanis and one Indonesian were killed.

Options market and stocks to watch

Peace headlines cut both ways. Watch for reactions across the energy and shipping complex:

• USO: watch for a bleed lower in the crude ETF if the Hormuz reopening narrative firms up.
• XOM and CVX: watch for pressure on integrateds tied to the war premium unwinding, offset by any lift in throughput.
• FRO and STNG: tanker names could reprice as rerouting premiums compress if Hormuz traffic normalizes.
• LMT: watch defense names for a knee-jerk fade on any credible ceasefire progress.

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