A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, US, on April 16, 2026.
Jeenah Moon | Reuters
Global markets enter this week weighing risk appetite against the country’s headwinds as prospects for US-Iran talks fizzled over the weekend.
US President Donald Trump canceled plans to send envoys Steve Witkoff and Jared Kushner to Islamabad for talks with Iran on Saturday, citing “tremendous conflict and confusion” in Tehran’s leadership.
Although uncertainty is high, Iran has offered a new proposal to the US to reopen the Strait of Hormuz and end the war, while postponing nuclear talks until the next day, Axios reported Monday, citing a US official and two sources familiar with the matter.
In a sign that efforts to reach a deal are still underway, Iran’s Foreign Minister Abbas Araghchi returned briefly to Islamabad on Sunday as Pakistani leaders tried to revive talks between Tehran and Washington – although Trump said talks could continue by phone. Araghchi is reported to have left Islamabad for Moscow.
Amid continued uncertainty over the vital waterway and the war in Iran, oil prices rose on Monday, reinforcing the risk premium that continues in energy markets.
Brent oil futures for the international benchmark rose about 1% to $106.55 a barrel while US crude oil added 0.88% to $95.23 a barrel.
US oil prices since the start of the year
Goldman Sachs now expects oil prices to remain high for longer, raising its forecast for Brent to $90 a barrel in late 2026 from $80 previously, as disruptions in the Persian Gulf prove more persistent than previously thought.
The bank wrote in a paper published on Monday that the delay in the normalization of Gulf exports, now only expected at the end of June, and the slow production recovery are tightening the supply, while the global inventory is estimated to draw by a record amount of 11 million barrels per day to 12 mbd in April.
The bank’s view was echoed by other market observers. “I would argue that the fat tail is still ahead of us, not behind us,” said Billy Leung, investment strategist at Global X ETFs. Fat tail refers to the probability of extreme events.
Even if the flow through Hormuz eventually resumes, the shortfall in restoring supply, combined with depleted inventories, suggests continued intensification. Global investment management firm Invesco estimates that $80 a barrel is likely the floor for Brent this year in the absence of complete normalization of flows.
Experts have warned that if this road continues to be disrupted, the greater the economic impact, as rising prices end up forcing the destruction of demand, especially in areas that import electricity.
Stocks: strong at the moment
Stocks have so far shown remarkable resilience, as global markets have recouped losses suffered at the start of the war, hovering near record highs despite ongoing energy shocks.
Analysts say this reflects the tension between the country’s risks and strong structural drivers, particularly artificial intelligence.
“Equities are balancing two opposing forces: the geopolitical left tail on one side, the commercial AI tail on the other, and right now the right tail is winning convincingly,” Leung said.
Still, some warn that the sentiment is growing.
“The fundamentals are high and I can respect that, but I’m not going to rush here either. Emotions are hot, positioning is tight, and historically high readings precede a soft rebound going forward,” Leung said.
Others see volatility as a buying opportunity. Rajat Bhattacharya, senior investment strategist at Standard Chartered, said a near-term market reversal is possible but they expect a deal in a few weeks that could restore cash flow.
“Any near-term volatility gives investors an opportunity to add riskier assets to a diversified portfolio,” he said.
Historical examples also suggest that markets can recover quickly from asset shocks. Ed Yardeni, economist and president at Yardeni Research, noted that oil prices doubled and stocks fell during the 1956 Suez crisis but later rebounded when the canal reopened.
Asia-Pacific stocks gained on Monday, including Japan Nikkei 225 and South Korea Kospi noting new record highs while US stock futures were largely stable, suggesting a limited spillover of the weekend’s developments.
Government bond markets were stable 10 year yield in US Treasurys increased by 1 point to 4.322%. while yields at the same time on Japanese government bonds were more than 2 points higher at 2.463%.
Goods, food and second order results
Beyond oil, the broader commodity complex is beginning to show deep and persistent disruption: particularly in natural gas and food supply chains.
“LNG is a negotiable leg here,” Leung said. “European volumes are running about a third above pre-war levels and about a fifth of global LNG has been turned off.”
Higher gas prices directly eat into fertilizer production and agricultural costs, raising the risk of a delayed but sustained increase in food prices.
“The pressure on the supply chain builds with a lag, so the CPI headline that prints this time will not appear immediately,” he added. “Agricultural inputs and transport insurance are where I will watch second order results develop next quarter.”
Invesco also warned that the disruption extends beyond oil, affecting commodities such as helium, aluminum and sulphur.
That increases the impact of inflation on all industrial chains, which could make it difficult to respond to policy as central banks are increasingly prone to shocks at present, Invesco’s head of global research Benjamin Jones wrote in a note on Monday.
As Leung put it: “A bull market is not volatile … but the tape measures the actual technical high against the power shock that has not yet fully played out.”
