US-Iran Peace Talks Stall: How Global Markets Will React

Global markets are entering the week balancing resilient risk appetite against renewed geopolitical strain as prospects for US-Iran negotiations faced setbacks over the weekend.

President Donald Trump scrapped plans to send envoys Steve Witkoff and Jared Kushner to Islamabad for talks with Iran on Saturday. The decision followed reports of “tremendous infighting and confusion” within Tehran’s leadership.

Despite the tension, Iran has offered a new proposal to the U.S. to reopen the Strait of Hormuz and end the war, while suggesting that nuclear talks be deferred. Iran’s Foreign Minister Abbas Araghchi made a brief return to Islamabad on Sunday before departing for Moscow.

Energy Markets and Oil Price Forecasts

Oil prices inched higher Monday as uncertainty lingers over the critical energy waterway. International benchmark Brent oil futures rose around 1% to $106.55 per barrel, while U.S. crude oil added 0.88% to $95.23 per barrel.

Goldman Sachs has raised its Brent forecast to $90 a barrel by late 2026, up from a previous estimate of $80. The bank noted that disruptions in the Persian Gulf are proving more persistent than assumed, with global inventories drawing at a record pace of 11 to 12 million barrels per day in April.

Investment firm Invesco estimates that $80 per barrel is likely the floor for Brent this year absent a full normalization of flows. Experts warn that prolonged disruptions in the strait could eventually force demand destruction in energy-importing regions.

Equity Resilience Amid Geopolitical Risk

Global equities have shown surprising resilience, recouping initial losses from the outbreak of the war to hover near record highs. Analysts describe this as a balance between geopolitical “left tail” risks and the “right tail” of artificial intelligence commercialization.

Asia-Pacific stocks gained on Monday, with Japan’s Nikkei 225 and South Korea’s Kospi both reaching new record highs. U.S. stock futures remained largely stable.

Government bond markets also remained steady. The 10-year yield on U.S. Treasurys rose 1 basis point to 4.322%, while the yield on equivalent Japan government bonds increased over 2 basis points to 2.463%.

Secondary Commodity and Supply Chain Effects

The disruption is extending beyond oil into natural gas and food supply chains. European LNG benchmarks are currently running about a third above pre-war levels, with approximately one-fifth of global LNG supply choked off.

Higher gas prices are expected to increase fertilizer production and agricultural costs, which may lead to a delayed but sustained rise in food prices. Analysts suggest these second-order effects will become more apparent in headline CPI prints over the next quarter.

Invesco further flagged that supply chain disruptions are affecting industrial goods, including helium, aluminum, and sulphur, potentially complicating policy responses for central banks.