Iranian media, citing Al-Arabiya, reported that a final draft of a US–Iran agreement has been completed, with Pakistani mediation. An official announcement was reported as potentially coming within hours.
The reported draft includes an immediate, comprehensive ceasefire. It also includes commitments by both sides not to target infrastructure.
Freedom Of Navigation Framework
The draft reportedly guarantees freedom of navigation through the Persian Gulf and the Strait of Hormuz. This would be overseen by a joint monitoring mechanism.
The draft reportedly sets out a gradual lifting of sanctions linked to Iran’s compliance. It also says talks on unresolved issues would begin within seven days.
News of a potential US-Iran deal is bearish for crude oil. The gradual lifting of sanctions could bring over 1 million barrels per day of Iranian oil back to the market within months. Derivative traders should look at short-term put options on Brent and WTI futures, which are currently trading near $85 a barrel.
A major source of geopolitical risk premium is set to evaporate from the market. With nearly 20% of the world’s oil transiting the Strait of Hormuz, this de-escalation will likely push the VIX index lower from its current level around 18. We see this as an opportunity to sell out-of-the-money call options on volatility indices.
Market Implications And Trade Ideas
Looking back, the heightened tensions throughout 2025 built a considerable floor under energy prices, something we are now seeing crumble. We remember the aftermath of the 2015 JCPOA deal, which contributed to oil prices falling by over 30% in the following months. A similar, though perhaps less dramatic, pattern could emerge now.
We should also anticipate weakness in specific sectors that priced in conflict risk. Defense contractor stocks are likely to face immediate headwinds, making put options on defense ETFs a timely consideration. The reduction in risk for vessels in the Persian Gulf could lower shipping insurance costs, though tanker rates might also fall as the war premium vanishes.
