Traders work on the floor of the New York Stock Exchange (NYSE) on April 16, 2026 in New York City, USA.
Gina Moon | Reuters
Global markets are entering the week balancing resilient risk appetite with new geopolitical tensions after prospects for US-Iran negotiations took a hit over the weekend.
US President Donald Trump on Saturday scrapped plans to send special envoys Steve Witkoff and Jared Kushner to Islamabad for talks with Iran, citing “extreme infighting and turmoil” within Iran’s leadership.
Despite great uncertainty, Iran has presented the United States with a new proposal to reopen the Strait of Hormuz and end the war, hinting at a postponement of nuclear negotiations, Axios reported on Monday, citing a U.S. official and two sources familiar with the matter.
As Pakistani leaders push to revive talks between Tehran and Washington, Iranian Foreign Minister Abbas Araghchi briefly returned to Islamabad on Sunday, suggesting attempts to reach a deal were still ongoing, but President Trump said talks could be held by phone instead. Araghchi reportedly left Islamabad for Moscow.
Crude oil prices edged higher on Monday, reinforcing a persistent risk premium in energy markets as uncertainty lingers over the vital energy waterway and the Iran war.
Brent crude oil futures, the international standard, rose about 1% to $106.55 per barrel, while U.S. crude oil futures rose 0.88% to $95.23 per barrel.
US crude oil prices since the beginning of the year
Goldman Sachs now expects oil prices to remain high for an extended period as disruptions in the Persian Gulf prove more persistent than previously assumed, raising its outlook for Brent to $90 per barrel by late 2026 from the previous $80 per barrel.
The bank said in a note on Monday that delays in the normalization of Gulf exports, now expected until the end of June, and delays in production recovery have sharply tightened supplies, with global inventories expected to reach 11 million barrels a day at a record pace and 12 million barrels in April.
Other market participants echoed the bank’s views. “I would argue that the fat tail is still ahead, not later,” said Billy Leung, investment strategist at Global XETF. Fat tail refers to the probability of an extreme event occurring.
Even if logistics through Hormuz eventually resume, delays in supply recovery and depleted inventories suggest the squeeze will continue. Global investment management firm Invesco predicts that Brent’s floor is likely to reach $80 a barrel this year unless distribution fully normalizes.
Experts warned that the longer the strait disruption continues, the more serious the economic impact will be, eventually forcing higher prices to destroy demand, especially in energy-importing regions.
Stock price: Solid for now
Stock markets have so far shown remarkable resilience, with global markets recovering losses suffered at the outset of the war and trading near record highs despite ongoing energy shocks.
Analysts say this reflects a tug-of-war between geopolitical risks and powerful structural factors, particularly artificial intelligence.
“The stock market is essentially a balance between two opposing forces: one is the geopolitical left, the other is the commercialization of AI right, and right now the right is winning convincingly,” Leon said.
Still, some warn that this sentiment has gone too far.
“The main trend is up, and we want to respect that, but we’re not chasing it here either. The market is hot, the positioning is crowded, and historically we’ve seen numbers rise before forward returns soften,” Leon said.
Some see volatility as a buying opportunity. Rajat Bhattacharyya, senior investment strategist at Standard Chartered, said while short-term market volatility was likely, he expected an agreement to be reached within weeks that could restore flows.
“Short-term volatility gives investors the opportunity to add risk assets within a diversified allocation,” he said.
Historical precedent suggests that markets can recover quickly from supply shocks. Ed Yardeni, an economist and president of Yardeni Research, said that during the 1956 Suez crisis, oil prices doubled and stock prices fell, but then rose to new highs when the canal was reopened.
Asia-Pacific stocks rose on Monday, with Japanese stocks also rising. Nikkei Stock Average and korean Kospi U.S. stock futures, while largely stable, have hit new record highs, suggesting that the ripple effect from the weekend’s moves is limited.
The government bond market was stable. 10 year yield U.S. Treasuries rose 1 basis point to 4.322%. Meanwhile, the yield on Japanese government bonds with the same duration was more than 2 basis points higher at 2.463%.
Commodities, foods, and secondary effects
Beyond oil, the broader commodity complex is beginning to reflect deeper and more durable disruptions, particularly in natural gas and food supply chains.
“LNG is not really discussed here,” Leung said. “European standards are about one-third above pre-war levels, and about one-fifth of the world’s LNG supply has been cut off.”
Rising gas prices have a direct impact on fertilizer production and agricultural costs, raising the risk that food price increases will persist, albeit slowly.
He added: “The main CPI results from this will not be reflected immediately as pressures in the food chain increase over time.” “Agricultural supplies and marine insurance would like to see second-order effects emerge in the next quarter.”
Invesco also warned that the disruption is extending beyond oil, affecting products such as helium, aluminum and sulfur.
Benjamin Jones, head of global research at Invesco, said in a note on Monday that even though central banks have indicated they intend to weather the shock for now, the effects of inflation could spread across industrial supply chains, complicating policy responses.
Leung said: “The bull market is intact…but the tape is balancing a true technical rally against an energy shock that has not fully unfolded.”
