The prospect of the US-Iran agreement is uncertain: oil prices dropped sharply and rebounded. Market predictions show that the probability of air travel resuming before August has increased to 60%.

Notice that the Iranian side believes that if a peace agreement is reached with the United States, the Strait of Hormuz can be restored to pre-war status in just one month. However, traders trading on the prediction market platform Kalshi are more skeptical. They believe that by July 1st, the likelihood of normal shipping traffic in the strait returning is only 38%. The contract defines "normal traffic" as the seven-day moving average of transit volume through the strait exceeding 60 based on IMF data. However, this probability level is higher than the approximately 32% probability given by traders before the new reports came out on Wednesday. Media reports quoted Iranian state television as saying they had obtained a draft framework memorandum of understanding with the United States, from which these details originated. The White House, however, denied the existence of any framework agreement with Iran. Traders are more confident that normal traffic will resume by August 1st, with a probability of 60%, higher than the 50/50 chances before the reports came out. However, all these probabilities are lower than the levels over the weekend when it seemed that the two countries were about to announce an agreement. On Sunday, the probability of normal traffic resuming in July was as high as 50%. As the United States and Iran remain deadlocked on how to reopen the Strait of Hormuz, and reports point to a new round of military strikes within Iran's borders, oil prices rebounded on Wednesday after falling more than 5%. Brent crude rose above $96 per barrel, while WTI crude approached $90 per barrel. President Trump said he was "not satisfied" with the negotiations; meanwhile, the White House denied Iran's reports on an alleged agreement to jointly regulate the waterway with Oman. A journalist quoted U.S. officials on social media platform X as saying that the U.S. military carried out a new round of strikes within Iran against a location posing a threat to U.S. forces and shipping traffic through the strait. Earlier this week, U.S. forces had attacked areas around the Strait of Hormuz. Despite facing numerous challenges, optimism in the market that the warring parties will at least reach a temporary agreement could result in crude oil prices recording a second consecutive week of decline. Key issues in the negotiations include Iran's nuclear program and Iran's desire to retain control of the Strait of Hormuz - which is currently under a dual blockade by both Tehran and Washington. Complicating matters further, Trump stated during a meeting at the White House that he would not sign a bad agreement and insisted that the U.S. would not ease sanctions on Iran, a stance in contrast to Iran's demands for an end to the attacks and financial relief. The president is also facing pressure from hardliners in the Republican Party to continue the war - now entering its fourth month since it erupted at the end of February. Chris Weston, research director at Pepperstone Group Ltd in Melbourne, stated that while the market is pricing in optimism through an extremely optimistic "half-glass full" mentality about reaching an agreement, the possibility of all parties storming off and "walking out of the negotiation room remains a clear risk." In the U.S., an industry group warned of another drop in crude oil stocks. The American Petroleum Institute (API) reported that national crude oil inventories fell by 2.8 million barrels last week, with stocks at the Cushing delivery hub in Oklahoma also declining. Official data will be released later on Thursday. Joe De La Crude, global energy strategist at Rabobank, said, The oil market is pricing in a lot of self-assurance right now. He noted that the release of strategic oil reserves and a sharp decline in Chinese imports are helping to alleviate some of the supply losses caused by the war. "By mid-July, if China resumes imports at the end of the U.S. strategic reserve release, we will witness a sharp upward turn in many refined oil prices," he said in describing the potential price surge. Failure to reach an agreement to end the conflict could prolong the interruption in oil supply. Since late February, this has resulted in a resurgence of inflation and a sharp rise in bond yields. It is expected that central banks, including the Federal Reserve, will ultimately raise interest rates in response.