TL;DR

Iranian forces fired warning shots at four vessels attempting to cross the Strait of Hormuz on Thursday evening, hours after US equity markets closed at record highs. A 60-day ceasefire memorandum of understanding (MOU) has been agreed at the negotiating table, but President Trump has not yet approved it. Asian benchmark indexes fell at the open, Brent crude held above $95 a barrel, and the next 24 hours pivot entirely on whether Trump endorses the deal.

What happened

Shortly after the US market close on Thursday, Iran's Mehr news agency reported that Iranian armed forces fired warning shots at four ships that attempted to pass through the Strait of Hormuz without prior coordination. Iran's Tasnim news agency separately confirmed the firing, describing it as a warning intended for vessels it considers unauthorized to transit.

The incident occurred on the same day US forces carried out fresh strikes on military sites near the Iranian port city of Bandar Abbas, and American air-defense units shot down four Iranian attack drones operating inside the strait. The combined activity -- mutual airstrikes and Hormuz warning shots -- represents some of the most direct engagement inside the waterway since the broader US-Iran conflict began in late February 2026.

At the diplomatic level, Reuters and four additional sources confirmed by late Thursday that negotiators from both countries had agreed in principle to a 60-day MOU to extend the ceasefire and reopen Hormuz to commercial shipping. The agreement still requires President Trump's formal sign-off. Trump said on Wednesday that Iran was "negotiating on fumes" and that the sides had not yet reached a deal, leaving the MOU's status uncertain going into the Asia trading session.

Why markets moved

Brent crude swung more than 3% intraday on Thursday, spiking above $97 after early reports of the fresh US-Iran strikes before pulling back toward $95 as ceasefire extension headlines built momentum. By the late afternoon, Brent held roughly 2% higher on the day, with the risk premium driven by the unresolved question of Hormuz access.

Asian equity markets opened lower, with benchmark indexes in South Korea, Hong Kong, and Australia falling as traders repositioned around the possibility that Trump withholds approval through the weekend. The Hormuz strait handles an estimated 20% of global oil supply and a significant share of liquefied natural gas (LNG) exports, so any sustained disruption carries broad inflation implications.

US equities finished the Thursday session at all-time highs. The Dow Jones Industrial Average added around 183 points to close at 50,644, the S&P 500 gained a fraction to 7,520, and the Nasdaq edged higher to 26,674. The calm domestic close reflected investor confidence that a deal would be signed -- but the post-market warning shots are now testing that assumption directly.

Thursday's PCE inflation report added context: headline PCE came in at 3.8% year-over-year for April, the highest reading in roughly three years according to Reuters. Core PCE rose 3.3% annually and 0.2% month-over-month. If oil remains elevated through a prolonged Hormuz standoff, it sustains the energy-driven inflation overhang that makes rate cuts by the Federal Reserve harder to justify. Fed Governor Musalem noted earlier Thursday that the probability of a rate hike is "greater than zero."

Implications for traders

Energy and commodity traders: Brent above $95 already reflects a meaningful risk premium. If Trump approves the MOU within 24 hours, expect a swift unwind toward the mid-to-high $80s. If he delays or rejects it, a push toward $97 to $100 is realistic, with WTI crude and natural gas futures following. Watch Brent's $95 level as the key threshold overnight.

Equity index and futures traders: US stocks priced in a deal. S&P and Nasdaq futures could gap lower at Sunday's electronic open if no approval comes through the weekend. The elevated PCE reading adds a second pressure point: sustained high oil prices feed directly into inflation prints that push back any rate-cut calendar. The Fed rate-hike risk tied to Thursday's PCE was already live before the Hormuz warning shots.

Crypto traders: Bitcoin retreated to approximately $73,000 to $74,000 on Thursday, a 6-week low tied in part to the risk-off tone from the Hormuz situation. A further deterioration in geopolitical sentiment tends to pressure crypto in the short run. A break below $72,000 could trigger additional leverage flushes in a market where whale and dolphin accumulation has already stalled, according to data from CryptoQuant cited earlier Thursday.

Potential positives vs negatives

Potential positives:

  • A Trump approval of the 60-day MOU would reopen Hormuz to commercial shipping quickly, reducing the oil risk premium and providing relief to energy-importing economies.
  • A signed deal removes a near-term inflation amplifier, giving the Fed more room to hold rates steady rather than raise them.
  • The ceasefire extension framework opens a lane for nuclear program negotiations, which would be a meaningful longer-term de-escalation signal for global markets.

Potential negatives:

  • Trump's public skepticism suggests approval is not certain. Any delay keeps Hormuz in partial dispute, sustaining elevated oil prices and the associated inflation risk.
  • Iran's willingness to fire warning shots at civilian vessels while negotiations are ongoing signals continued leverage tactics and raises the risk of miscalculation.
  • A prolonged Hormuz disruption alongside a 3.8% PCE reading materially raises the probability of a Fed rate hike, which would reprice bonds and equities at a time when US stocks are at all-time highs.

What could happen from here

Base case: Trump approves the 60-day MOU within 24 to 48 hours under pressure from energy markets and Gulf allies. Commercial shipping restores on a staged basis, Brent retreats toward $87 to $90, Asian markets recover into the weekend, and US futures stabilize.

What confirms this path: A Trump announcement indicating MOU approval; oil falling more than 2% on the headline; Gulf state leaders expressing public support.

What invalidates it: Trump publicly rejects the MOU, or Iran escalates from warning shots to an actual vessel seizure or detention.

Upside scenario: Trump announces approval Friday morning, Iran pulls back on Hormuz enforcement, and the ceasefire holds through the full 60-day window. Oil drops to the high $80s, global equity markets rally on the risk unwind, Bitcoin stabilizes above $75,000, and the inflation picture improves enough to push rate-hike speculation back off the table.

What confirms this: Brent below $90 by Friday's close; no new strikes or detentions reported by Saturday.

Downside scenario: Trump delays approval through the weekend, Iran detains or immobilizes a vessel inside the strait, or US forces execute additional strikes that collapse the negotiating framework. Oil spikes toward $100 to $105 a barrel, the VIX expands sharply, equities gap lower at Sunday's electronic open, and Bitcoin tests $70,000.

What confirms this: Reports of an Iranian vessel seizure; a Trump statement ruling out the MOU; Brent crossing $97 with no deal headline in sight.

What to watch next

  • Trump's statement on the MOU: Formal approval, rejection, or any timeline comment is the single largest market catalyst going into the weekend.
  • Hormuz shipping activity: Whether additional vessels attempt transit and how Iranian forces respond will reveal whether Thursday's warning shots were a tactical signal or the start of a renewed blockade posture.
  • Brent crude price action: The $95 level is the overnight line to watch. A sustained break above $97 suggests ceasefire optimism is unwinding in energy markets.
  • Asia session close: Recovery in South Korean, Hong Kong, and Australian equities by session end would signal that institutional traders expect a deal soon. Continued pressure suggests they are hedging against a delay.
  • Fed communication: Any Fed official comment on the intersection of oil prices and Thursday's 3.8% PCE print will shape rate expectations going into next week.

Sources

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