Peace talks between Washington and Tehran took a dramatic turn on Wednesday, sending shockwaves across global energy and financial markets.
President Trump pointed to “great progress” toward reaching a peace agreement that would end the US war with Iran and markets responded immediately. Brent crude oil, the international benchmark, dropped nearly 12% to below $100 per barrel, while Dow Futures surged 500 points on hopes the conflict, which began February 28, could be nearing its end. Washington Times
US officials and sources briefed on the matter told Axios that the White House believes it is nearing a one-page, 14-point memorandum of understanding to end the war and establish a framework for more detailed nuclear talks.
At an event celebrating Mother’s Day with military families, Trump told reporters Iran wants to reach an agreement. “We’re dealing with people that want to make a deal very much, and we’ll see whether or not they can make a deal that’s satisfactory to us,”
However, Trump’s tone remained cautious and at times threatening. He told PBS News that the war has a “very good chance of ending,” but added bluntly, “if it doesn’t end, we have to go back to bombing the hell out of them.” He also told The New York Post that it is still “too soon” to start thinking about another round of in-person peace talks.
Market optimism followed Trump’s announcement that he would pause “Project Freedom” an effort to free ships stuck in the Strait of Hormuz upon the request of Pakistani mediators. Pakistani Prime Minister Shehbaz Sharif stated, “We are very hopeful that the current momentum will lead to a lasting agreement that secures durable peace and stability for the region and beyond.” Washington Times
On the Iranian side, Foreign Ministry spokesperson Esmaeil Baqaei confirmed Tehran is still reviewing the proposal and would present its response to mediators in Pakistan. CNBC
As negotiations ramp up, Iran faces mounting economic pressure to end the war as it struggles to export oil under Trump’s blockade. Trump, meanwhile, faces pressure at home: the national average price of a gallon of gasoline reached $4.54 on Wednesday, up from $4.23 a week earlier and roughly $3 at the start of the conflict. Washington Times
An end to hostilities remains far from assured. Previous efforts to reach a deal have fallen short Vice President JD Vance, special envoy Steve Witkoff, and Jared Kushner held in-person talks in Islamabad last month but left empty-handed. NBC News
The world is watching closely. A final deal could reshape global energy markets, reopen one of the world’s most critical shipping lanes, and mark a defining moment in Trump’s second term but as of now, all sides remain locked in a high-stakes waiting game.
War Powers pressure & domestic stakes
The Trump administration has argued that the April 7 ceasefire “terminated” hostilities for the purposes of the 1973 War Powers Resolution, allowing it to sidestep the requirement to withdraw troops or seek Congressional authorization within 60 days. Lawmakers have challenged this interpretation. Trump has neither sought a 30-day extension nor brought the conflict to Congress for a vote.
On the home front, the war’s economic toll has been severe. The average US retail gasoline price hit $4.54 per gallon on Wednesday less than 50 cents from its all-time high of $5.02 reached in June 2022 and up more than 50% since hostilities began. US crude oil inventories have fallen for three consecutive weeks, adding further pressure on consumers.
