The United States and Iran are reportedly close to a two-stage agreement that would extend a 60-day ceasefire to first reopen the Strait of Hormuz, followed by nuclear negotiations. While President Donald Trump said he would "not rush" amid pushback from hardline Republicans opposed to the "ceasefire-first, nuclear-deal-later" framework, Asian stock markets rallied across the board on the shift toward ending the conflict.
Esmaeil Baghaei, spokesperson for Iran's Ministry of Foreign Affairs, said at a regular briefing on the 25th (local time) that "it is true that we have reached an agreement on a substantial portion of the dialogue agenda (with the United States)." He added, "The focus of the ongoing negotiations with the United States is ending the war," stressing that "the nuclear issue is not being discussed at this stage."
Trump said the same day on his social media platform Truth Social that "there will be either a great and meaningful deal with Iran, or no deal at all." This represents a step back from his comments on the 23rd, when he said "the final terms of the agreement are being discussed and will be announced soon," signaling acceleration of the deal. US and Iranian media reported that the agreement includes measures to restore traffic through the Strait of Hormuz to pre-war levels within 30 days.
On expectations of an end to the conflict, Brent crude and West Texas Intermediate (WTI) prices both plunged as much as 6% intraday, while Asian stock markets rose in unison, including Japan (2.87%) and Taiwan (3.26%).
"Middle East Crude Imports to Resume" Optimism Spreads…Japan, Taiwan Stocks Rally to Record Highs
As the US-Iran ceasefire agreement gained rapid momentum, Japanese and Taiwanese stock markets hit record highs, with Asian markets — which had been weighed down by the Middle East energy crisis — rising across the board. The rally came as international oil prices plunged by as much as 6% on news that the US and Iran had agreed to a 60-day ceasefire, would restore Hormuz Strait traffic to pre-war levels, and would lift the ban on Iranian oil exports.
However, cautious voices note that this is not yet a moment for relief, as last-minute variables remain — including the need for both the US and Iran to persuade their respective hardliners — and the discussion concerns a temporary ceasefire rather than a full end to the war. Forecasts that even if the Strait of Hormuz reopens immediately, normalization could take until at least the second quarter of next year, also serve to temper the optimism.
The global crude benchmark Brent crude plunged more than 6% intraday, falling back below $100 for the first time in about a month since the 24th of last month. WTI also dropped more than 6% intraday, sliding to the low $90 range.
Hormuz Traffic to Recover to Pre-War Levels
US Also Pushing to Lift Iran Oil Export Ban
Oil prices fell on expectations that the Hormuz Strait blockade — which began immediately after the US military's "Operation Mighty Wrath" on February 28 of this year and has weighed on global energy markets for more than 80 days — would be lifted. The Washington Post (WP) bolstered the optimism by reporting that the memorandum of understanding (MOU) under consideration by the US and Iran includes a provision to restore strait traffic to pre-war levels within 30 days. Iranian media outlets including Fars and Tasnim had earlier reported that the MOU contained such provisions. According to the WP, the MOU is also expected to include a declaration by Iran, the US, and their allies to immediately end military operations on all fronts, including in Lebanon.
Asian countries, which had entered a state of energy emergency due to the Hormuz blockade, appeared to breathe a sigh of relief. Japan and Taiwan, which rely on the Middle East for more than 90% of their energy imports, saw their stock markets set new record highs. Japan's Nikkei 225 closed at an all-time high of 65,158.19, surging past the 64,000 threshold for the first time intraday before quickly breaking through 65,000. The Nihon Keizai Shimbun analyzed that "as oil prices declined on expectations of easing Middle East tensions, this fed into a buying spree for artificial intelligence (AI) and semiconductor stocks."
Taiwan's Taiex also rose 3.26% to 43,644.40, breaking the previous record of 42,267.97 set on the prior trading day (May 22) in just one day. TSMC, the world's largest foundry (contract chipmaker) and Taiwan's largest company by market capitalization, rose 2.44%, leading the rally. Other Asian markets also rose, including the Philippine PSEi (0.80%) and China's Shanghai Composite (0.96%).
White House: "1-2 Months After War's End Is Sufficient"
Some Forecast Normalization in Q2 of Next Year
However, forecasts are split on when the shock from the Hormuz Strait blockade will be resolved. Kevin Hassett, Director of the White House National Economic Council (NEC), said on US broadcaster CBS that "once the war between the US and Iran ends, in one to two months, all refineries around the world will be supplied with the crude oil they need." His reasoning is that while there will be country-by-country differences depending on distance from the Strait of Hormuz, once the strait is opened, tankers will return and almost immediately refill refineries with crude.
However, the dominant analysis is that normalizing the Strait of Hormuz, which has been closed for more than 80 days, will require more time. First, approximately 1,500 to 2,000 vessels are reportedly stranded in the Persian Gulf, unable to exit the Strait of Hormuz. The removal of mines that Iran is presumed to have laid in the strait is also a key variable. The International Energy Agency (IEA) analyzed that it could take several weeks just for the US and its allies to deploy mine-clearing vessels and equipment to the site. In addition, insurers are likely to demand vessel escorts and additional safety measures, suggesting that higher logistics costs and shipping delays will continue for some time.
Sultan Al Jaber, CEO of UAE state-owned energy company ADNOC, recently said, "Even if the conflict ends immediately, it will take at least four months for traffic through the Strait of Hormuz to recover to 80% of pre-war levels," adding that "full normalization will be difficult before the first or second quarter of next year."
As a result, even if international oil prices and other energy prices fall to some extent, contrary to expectations, a rapid return to pre-war levels may be difficult. Hamad Hussain, commodities economist at Capital Economics, said, "A downward price trend will only emerge once the supply-demand balance in the oil market substantially improves, which is likely to be after 2027."
