IRNA reports that Iran has relayed its rejection of a ceasefire plan.
The message from Tehran has been consistent, they want a permanent end to the war with security guarantees and compensation, not a temporary ceasefire. They say they’ve been attacked during negotiations before and want everything settled before unblocking Hormuz.
“That’s not surprising,” said former US national security advisor Mark Esper. “I don’t see a ceasefire coming, the sides are too far apart.”
Of course, there are ‘demands’ in the media and then real negotiations. Many wars have ended surprisingly and suddenly due to negotiations that weren’t done in public.
Axios now reports that Iran sent a 10-point response to the proposal to end the war but it was also described as ‘maximalist’ and makes it unclear if it will allow for a diplomatic solution.
WTI crude oil is down 31-cents to $111.18. The S&P 500 is up 13 points, or 0.2%, to 6593.
The main event today is Trump’s 1 pm speech. In general, he’s usually less hawkish live than via social media and it will certainly be tough to sound as unhinged as his Easter post yesterday. That said, the market was betting he would tone down the rhetoric in last week’s live speech and that wasn’t the case, leaving to a big jump in oil prices and a fall in stock markets.
So it’s fair to say that the market prices in something less hawkish live and we will have to see where it lands. With Iran rejecting the ultimatum, he’s backed himself into a bit of a corner on attacking infrastructure and my guess is that he continues to escalate. At that point, we will see if Iran is capable of retaliating and if we get to a point where Iran and gulf oil infrastructure is badly damaged, then oil prices have nowhere to go but up. Even if it’s just Iran’s oil industry that’s broken, that would leave a notable gap in global supply capable of sustaining +$150 oil this year and perhaps beyond.
This article was written by Adam Button at investinglive.com.
