Fragile

Another day, another surprise in the negotiations between the US and Iran. The memorandum of understanding (MoU) was signed electronically on Wednesday, marking a preliminary framework to extend a fragile ceasefire from the conflict. Thanks to that framework, we should have Immediate and permanent end to military operations on all fronts, including Lebanon and the reopening of the strait of Hormuz. With that, comes a 60-day window for negotiations on a more comprehensive deal, including Iran’s nuclear program, ballistic missiles, and long-term peace. But, follow-up in-person talks scheduled for today (June 19) in Switzerland were abruptly called off. Vice President JD Vance canceled his travel, and Switzerland confirmed the cancellation. This stems from ongoing Israel-Hezbollah exchanges in Lebanon, which Iran views as undermining the ceasefire spirit. Iran’s Supreme Leader Ayatollah Khamenei has signaled that broader peace will not be straightforward. Once again, the fragile deal is tumbling and the reopening of Hormuz might be delayed or short lived. Markets do not like this, even though they were probably skeptical of the validity and seriousness of the deal in the first place. Oil is mildly up, and futures point to a flat open.

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