Optimism that an agreement for the resumption of shipping routes in the Strait of Hormuz and normalization of crude oil transport is imminent has spread, causing oil prices and the dollar to fall simultaneously, and risk asset preference to revive. WTI crude oil plummeted over 5% in early trading on the 25th (local time), while risk-sensitive currencies such as the Australian dollar and South African rand strengthened against the dollar. S&P 500 index futures also showed an upward trend, after closing near an all-time high on the 23rd (local time). A senior U.S. official stated on the 25th that the U.S. and Iran are close to an agreement on reopening the Strait of Hormuz, but negotiations over key wording are ongoing and final approval could take several days. Conversely, Iran's semi-official Tasnim news agency warned that the draft agreement could fall apart as the U.S. is creating obstacles in some key provisions, such as Iran's demand for the unfreezing of assets. Tony Sycamore, an analyst at IG Sydney, said in a client report, "The market's upward momentum from last Friday seems set to continue," adding, "While there's still a chance the deal could fall through, for now, financial markets appear to be leaning towards trusting these reports."
