MARKETS SPLIT AS IRAN STRIKES CLOUD HORMUZ DEAL

Global markets moved unevenly Tuesday after fresh U.S. strikes in southern Iran complicated hopes for a quick agreement to reopen the Strait of Hormuz. Oil prices rose as traders reassessed the risk of continued disruption, while equity markets split by region as investors weighed diplomatic progress against the possibility of further escalation. Reuters reported that Iran accused Washington of violating the ceasefire, while U.S. officials described the strikes as defensive.

Brent crude climbed about 4% after the U.S. military strikes, according to Reuters, reversing some of the previous day’s decline that had followed optimism around a possible U.S.-Iran deal. Reuters reported that Iran has effectively restricted most non-Iranian shipping through the Strait of Hormuz since the war began in late February, disrupting a route that normally carries a major share of global oil and liquefied natural gas flows.

European equities weakened as the renewed strikes dampened confidence that a settlement was close. Reuters reported that the STOXX 600 fell 0.6% after nearing record highs the previous day, while Brent’s rise revived inflation concerns for oil-dependent European economies. The report also noted that European Central Bank policy expectations remain sensitive to energy prices and inflation pressure.

India’s markets also came under pressure. Reuters reported that the Nifty 50 fell 0.49% and the BSE Sensex dropped 0.63%, with investor caution tied to higher oil prices and reduced optimism over a quick Middle East peace deal. India is a major oil importer, which makes higher crude prices especially important for inflation, trade balances, and consumer costs.

The market picture was not uniformly negative. Reuters also reported that U.S. stocks were lifted by technology shares and that WTI crude later eased on renewed peace-deal hopes, showing how quickly markets are shifting with each new Iran headline. That split reaction suggests investors are not pricing in a single outcome yet. Instead, they are moving between relief and caution as diplomacy and military action continue at the same time.

The Strait of Hormuz remains the central market risk. A durable reopening could lower energy-price pressure and support risk assets. A delayed or partial reopening could keep oil elevated even if a political framework is announced, because shipping routes, insurance, mine-clearing, verification, and physical supply flows may take time to normalize. Reuters reported earlier that analysts expect oil flows may take months to return to normal even if a deal is reached.

For markets, the immediate issue is not just whether negotiators reach an agreement. It is whether traders believe the deal can survive fresh strikes, Iranian retaliation threats, mine concerns, and uncertainty over safe passage through Hormuz. Until those questions are clearer, oil, currencies, bonds, and equity markets are likely to keep reacting sharply to each diplomatic or military update.

Fact-check date: 26 May 2026
Sources: Reuters, The Guardian

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