US-Iran Talks; Israel Agree To Direct Lebanon Talks | Horizons Middle East & Africa 4/10/2026
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Summary
- Markets are trading with cautious optimism ahead of high-stakes U.S.-Iran ceasefire talks in Islamabad, with the S&P 500 on a seven-day winning streak and Asian indices set for their first weekly gain since February.
- A key market focus is the Strait of Hormuz, which remains effectively shut and controlled by Iran, with transits limited to Iran-linked shipments. Iran is attempting to institute a protocol involving toll fees, which the U.S. has called unacceptable.
- Oil (Brent) is hovering around $96, about $20 higher than pre-war levels, with prices supported by the Strait's closure and recent attacks on Saudi energy infrastructure that cut pipeline and refining capacity.
- Adam Ramey believes Iran views control of the Strait as a bargaining chip, not a permanent goal, and that Iran is likely to "forsake" Hezbollah in negotiations to secure a broader deal, given its acute economic pain from hyperinflation and war damage.
- FX analyst Mahjabeen Zaman views the U.S. dollar's trajectory as tied to the reopening of the Strait of Hormuz and subsequent oil price moves. She expects three Fed cuts in H2 2024, viewing the oil shock as a supply-side issue that will not cause sustainably high inflation.
- On USD/JPY, Zaman sees near-term firmness for the dollar pushing the pair higher, but does not expect Japanese intervention soon as the move is driven by macro fundamentals (energy-driven inflation) not speculative flows.
- Former Ambassador Marc Sievers is skeptical of the talks, stating Iran has "blinked" by accepting a ceasefire it previously rejected. He believes an acceptable U.S. outcome—involving denuclearization and full Strait reopening—is close to "Iranian capitulation" and may require further military force.
- Sievers sees a high chance the ceasefire breaks and military action intensifies if Iran feels it has the upper hand in negotiations.
- The conflict is reshaping global risk perception, with some credit fund managers reportedly turning more positive on African assets, arguing that global volatility makes Africa's growth story and young demographic look comparatively attractive.
- Diplomatic friction is emerging, as U.K. Prime Minister Keir Starmer criticizes U.S. President Trump's rhetoric and draws a parallel between costs imposed on the U.K. by the actions of Putin and Trump.
Trade Ideas
The Strait of Hormuz remains effectively shut, controlled by Iran, with traffic consisting exclusively of Iran-linked shipments. Brent oil is hovering around $96, ~$20 above pre-war levels. Recent attacks have cut Saudi pipeline and refining capacity. The upcoming U.S.-Iran talks will determine if the Strait reopens, which is critical for global oil supply. The market is cautiously optimistic but edgy, with price direction contingent on the talks' outcome regarding Iranian sovereignty over the chokepoint. The immediate direction for oil is binary and tied to geopolitical diplomacy this weekend, making it a highly salient watch item. A breakthrough deal that reopens the Strait fully and quickly could pressure prices lower. A collapse in talks or Iran maintaining control could sustain or increase the geopolitical risk premium.
The dollar recently lost its safe-haven bid despite the conflict. Analyst cites U.S. policy uncertainty (2025 election) and fiscal challenges as downward pressures, but expects 3 Fed cuts in H2 2024. The dollar's path is a "push and pull." It faces structural domestic headwinds (politics, fiscal, Fed cuts) but its near-term trajectory is linked to the Strait of Hormuz reopening and the consequent oil price move, which affects inflation and growth dynamics. Mixed drivers create a neutral outlook, with no clear directional edge from the geopolitical lens alone. A sustained oil price spike from a prolonged Strait closure could alter the Fed's reaction function and provide dollar support, overriding domestic political concerns.
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This Bloomberg Markets video, published April 10, 2026, features Multiple (Anchor, Mahjabeen Zaman discussing WTI, USD. 2 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Multiple (Anchor, Mahjabeen Zaman · Tickers: WTI, USD