US and Iran Wrangle Over Talks; Stocks Slip, Oil Gains | Horizons Middle East & Africa 3/26/2026

Summary

• U.S. and Iran are exchanging conflicting messages on peace talks, with Iran issuing maximalist demands including sovereignty over the Strait of Hormuz, reparations, and security guarantees, while the U.S. insists negotiations are ongoing.
• Brent crude oil prices are elevated near $104 per barrel, but some analysts argue they should be higher given the physical disruption from the closed Strait of Hormuz; however, fuel product prices like jet fuel have recently subsided.
• Equity markets show caution with S&P futures down 0.4% and European markets lower, reflecting uncertainty ahead of a diplomatic deadline; the S&P is down 6% for the month but flat over six months.
• Justin Muzinich believes markets are relatively calm compared to rhetoric, and the U.S. has tools to intervene if needed; he sees inflation risks contained unless the war prolongs and impacts wages.
• Muzinich highlights private credit as overly crowded, leveraged, and risky, particularly with AI exposure, but does not view it as systemic to the U.S. economy.
• Mark Cudmore remains bearish on stocks due to the Middle East conflict, private credit vulnerabilities, and AI disruption; he draws parallels between private credit risks and the 2008 housing crisis, expecting prolonged issues.
• Xi Nan notes that oil prices could be higher if the Strait of Hormuz remains shut, but demand-side factors and stable renewables in Europe are mitigating pressures; Asian economies are implementing demand-curbing measures.
• South Africa's central bank is expected to hold interest rates due to oil-driven inflation risks, with growth concerns if prices remain above $110 per barrel.
• The G-7 meeting aims to bridge U.S.-European divisions on the war, with allies reluctant to engage militarily but focused on energy security and diplomatic offramps.
• A planned Trump-Xi summit in May is contingent on de-escalation in the Middle East, with China leveraging its energy resilience from renewables investments.