Fars reported that Saeed Ajorlou, described as a member of Iran’s negotiating team, set out a four-stage proposal for an Iran–US deal. The first stage would focus on ending the war and halting military actions. A second stage would move to operational measures and mechanisms linked to the Strait of Hormuz, including lifting a US Navy blockade, removing restrictions, ending oil sanctions, and unfreezing Iran’s assets and blocked financial resources.
Under the plan, a third stage would cover talks on further actions and Iran’s nuclear programme. The fourth and final stage would create a supervisory committee tasked with overseeing implementation of the understanding and monitoring the commitments of all parties involved.
Implications for the Geopolitical Risk Premium and Oil Market Strategy
We are viewing this four-stage proposal as a significant signal of potential de-escalation in the Middle East. The immediate effect is a reduction in the geopolitical risk premium that has been supporting oil prices for months. This suggests that the path of least resistance for crude oil in the coming weeks is downwards.
This outlook calls for adjusting our positions in crude derivatives, specifically looking at selling call options on Brent and WTI with July and August expiries. After the recent tensions in the Strait of Hormuz pushed August Brent futures above $104 last week, this news has already seen them retreat below $98. We see an opportunity as implied volatility is still elevated from the uncertainty over the past month.
We also anticipate a decline in overall market volatility, which has been a persistent theme throughout early 2026. The oil volatility index (OVX) has already pulled back from its recent highs above 45, and we expect it to settle into a lower range if talks gain traction. This makes selling volatility through strategies like short strangles on oil ETFs a viable approach for generating income.
Prospects for Supply, Volatility, and Deferred Futures
Historically, the market tends to price in the prospect of a deal well before it is finalized. We saw a similar dynamic in the months leading up to the 2015 nuclear agreement, where oil prices softened in anticipation of returning Iranian supply. While this proposal is only the first step, it shifts the market’s focus from immediate conflict risk to the possibility of future supply increases.
The second phase of the proposal is the most critical for oil markets, as lifting sanctions could reintroduce significant supply. Current estimates show that Iran could add over 1.2 million barrels per day to global markets within six months if sanctions are fully removed. This potential supply increase is already putting pressure on deferred futures contracts for early 2027.
