US-Iran Talks Progress Boosts Risk Sentiment, Crude Opens Lower, US Futures Rise

Boosted by multiple positive progress in US-Iran negotiations, Brent crude oil futures opened sharply lower by 3.5%, and US stock futures rose in tandem, further warming expectations for the Fed's subsequent rate cuts.​

According to Al Arabiya TV on May 24, citing sources, the US and Iran are expected to reach a preliminary memorandum of understanding called the "Islamabad Declaration" soon, which will be announced by Pakistan without the presence of all negotiating parties, followed by the start of final agreement negotiations. The next official talks are expected to be held on June 5, with the US and Iran sending their delegation leaders to participate in the consultations.​

The core details of this round of negotiations are gradually revealed. US senior officials publicly clarified that no agreement related to Iran would be signed on May 24th. Market news indicates that the core terms of the proposed agreement include Iran opening the Strait of Hormuz in exchange for the US revoking the blockade measures against the Strait of Hormuz and Iranian-related ports, while the US explicitly rejects the fee mechanism for the Strait of Hormuz. US insiders revealed that Iran's Supreme Leader, Ayatollah Khamenei, supports this overall framework of the agreement.​

The statements from various parties outline the complex and cautious pace of the negotiations. US President Trump earlier stated that the US and Iran have essentially finalized the agreement, pending final confirmation from all parties, and has instructed US negotiators not to rush to reach a consensus, emphasizing that "time is on the side of the United States," and clearly stating that all blockade measures against Iran will remain in effect until the agreement is completed and authenticated. In addition, Trump reiterated the bottom line, demanding that Iran should not develop or acquire nuclear weapons and related technologies. Iranian President Hassan Rouhani publicly stated that Iran can announce to the international community at any time that it is not seeking nuclear weapons and has no intention of causing regional turmoil, while criticizing Israel for destabilizing the Middle East, and emphasizing that Iran will never compromise on issues of national honor and dignity.​

The White House's Chief Economic Advisor, Kevin Hassett, publicly stated that the implementation of the US-Iran agreement will lead to a significant drop in energy prices and may even give rise to a scenario of "negative inflation" in the United States, significantly easing domestic inflationary pressures and releasing ample policy space for the Federal Reserve to cut interest rates. He also expressed respect for the Fed's independence and gave recognition to the Fed's related decisions.​