The global economy has been pricing in wars, sanctions, and geopolitical tensions for the past few years. The energy shock, which began with the Russia-Ukraine war, deepened further with the Iran-Israel-US tension. Therefore, the negotiations currently underway between Iran and the US are not merely a diplomatic process concerning the parties to this conflict, but have a broad impact, ranging from energy markets and inflation to central bank interest rate policies and global growth. Both sides want to reach an agreement, but expectations don't align. Iran has suffered significant losses in this war. Rebuilding the devastated areas, particularly the civilian casualties, will require considerable time and budget. While Iran's leverage over the Strait of Hormuz strengthens its hand, economically it clearly needs a reasonable ceasefire rather than a continuation of the war. The Trump administration cannot be said to have achieved complete success either.

Although rising oil prices support the US energy sector and increased geopolitical risks bring new orders to defense companies, the prolongation of the war increases economic and political costs. Therefore, a controlled ceasefire appears to be a more rational option for the US. However, the parties cannot reach an agreement at the table. Iran demands the release of at least half of its assets blocked in foreign banks. It demands tolls for transit through the Strait of Hormuz, defends its nuclear energy as a right to peaceful use, and rejects the destruction of enriched uranium or its extraction by another country.

Trump, on the other hand, insists that Iran transfer its enriched uranium stockpiles to a third country or destroy them under international supervision. He also makes the opening of the Strait of Hormuz to all commercial traffic without tolls a precondition. In short, the parties' red lines suggest a limited compromise rather than a comprehensive agreement. Essentially, the mere presence of the parties at the table is enough to create optimism in the markets. Because what matters to investors is not just the agreement itself, but the strengthening of the expectation that the war will not escalate further. The limited rise in oil prices last week, despite reciprocal retaliations, also supports this. While it is difficult to predict the direction of the markets under this uncertainty, it is possible to evaluate them with various scenarios.

Even though it seems unlikely, let's consider it. In the most optimistic scenario, the parties reach a comprehensive agreement through mutual concessions. In this case, Iran's nuclear activities would be placed under international supervision, and a significant portion of sanctions would be gradually lifted. With the risk to the Strait of Hormuz eliminated, the return of Iranian oil to global markets would accelerate, and the country's ties to the international financial system would be strengthened. The regime would remain unchanged; however, with the easing of sanctions, Iran could once again become an actor reintegrating into the global economy. Brent oil would approach the $70-80 range. The decrease in energy costs would ease global inflationary pressure, allowing major central banks to more easily implement interest rate cuts in the second half of the year. A new wave of rallies could begin in stock markets. Risk appetite could also shift back towards emerging markets. However, the underlying scenario currently priced into the market is not so optimistic; a more controlled escalation and limited compromise are expected.

The scenario most likely to be adopted by the markets today is that, even if the parties fail to reach a comprehensive agreement, they will find a limited compromise to prevent the conflict from escalating. In this scenario, Iran will not completely abandon its nuclear program; nor will the US lift sanctions entirely. However, the parties will avoid direct conflict, the Strait of Hormuz will not be completely closed, and steps that threaten energy supply will be taken in a controlled manner. In fact, the behavior of the oil market in recent weeks, despite all the negative news flow, supports this expectation. While Brent crude could not remain above $100 during periods of escalating tension, it could not stay below $90 on days when news of negotiations strengthened. The market is essentially pricing the $90-$100 range as an area of ​​equilibrium in an environment of uncertainty. Investors do not fully believe in either a comprehensive peace or a major energy crisis. In such an environment, while energy prices may remain high, they will not reach levels that would create a new inflationary shock. Therefore, the Fed and other major central banks will not completely close the door to interest rate cuts, but the direction of these decisions will be awaited in the second half of the year. A similar outlook emerges in the gold market. It maintains its strong levels, but struggles to generate new and lasting records because the war environment is not completely over. In other words, investors neither completely avoid risk nor aggressively invest in risky assets. Therefore, instead of a major rally in the markets, a volatile but balanced appearance prevails. In short, the world economy gets a little breathing room in this scenario; but it cannot fully relax.