TL;DR

Iran's formal reply to the US peace proposal was expected by Friday night US time but has not arrived as of Saturday morning (8 a.m. UTC, May 9). That silence is itself market-relevant. Traders heading into the weekend face a clear binary: a positive response signals a potential oil price relief rally and risk-on tone for Monday; a rejection or continued delay risks another leg higher in Brent crude and a risk-off open for equities. This post breaks down each scenario and what to watch before markets reopen.

What Happened: The Peace Proposal and the Missing Letter

On Friday, May 8, US President Donald Trump told reporters outside the White House that he was expecting Iran's formal written response to a US peace proposal "supposedly tonight." Secretary of State Marco Rubio echoed that expectation, saying Washington anticipated a reply from Tehran on Friday.

By the time Asian markets open on Monday, that response window will have passed. As of Saturday morning UTC, no formal Iranian reply has been confirmed by US officials or major newswires.

The broader backdrop: the US and Iran have been in a fragile ceasefire since approximately early April 2026, following strikes by US and Israeli forces that began in late February. Sporadic exchanges of fire between US naval destroyers and Iranian forces in the Strait of Hormuz continued into Friday, despite both sides saying the ceasefire technically remains in effect. Iran's foreign ministry described the situation as a "nominal ceasefire," signaling that Tehran views the truce as fragile and conditional.

The Strait of Hormuz, through which roughly 20 percent of global oil supply normally flows, is effectively closed to commercial shipping. The UK House of Commons Library noted that almost no shipping has used the strait and it remains functionally blocked. For the latest on Friday's Hormuz clash and how it moved oil and stocks, see our earlier coverage: US-Iran Hormuz Clash Tests Ceasefire as Oil Spikes to $103 and Stocks Hit Records.

Why This Is Market-Moving

The US-Iran conflict has already triggered what analysts are calling the largest disruption to world energy supply since the 1970s crisis. Brent crude was trading near $103 per barrel and WTI around $95.78 as of Friday's close, having risen as much as 2.9 percent during intraday trading on Hormuz escalation fears.

US equity markets largely shrugged off war risk on Friday, with a stronger-than-expected April jobs report providing a counterweight. The S&P 500 closed at a record 7,398.93 (up 0.84 percent) and the Nasdaq Composite hit 26,247.08 (up 1.71 percent), marking the sixth consecutive weekly gain. However, that resilience rested on the assumption that the ceasefire holds and a deal framework remains possible.

Iran's response, or the absence of one, removes that assumption for Monday morning in Asia. Oil futures (Brent and WTI) trade around the clock, meaning a diplomatic development this weekend would show up in prices before US equity futures even open Sunday night. On the macro side, Goldman Sachs has already pushed back its Fed rate-cut forecast due to elevated inflation partly driven by energy costs: Goldman Sachs Delays Fed Rate Cut Forecast Amid Elevated Inflation.

Context: Where the Negotiations Stand

The US proposal would halt active fighting while leaving Iran's nuclear program and sanctions as topics for a separate later negotiation. Trump called Iran's earlier 10-point counterproposal "significant" but "not good enough." Iran, meanwhile, has insisted that Lebanon must be included in any ceasefire framework, tying the deal to the broader regional conflict. Senior Iranian officials rejected several US concessions in recent days, according to The Guardian.

Iran rejected a previous 15-point US peace plan outright. That history makes a clean "yes" response unlikely in the near term, though officials on both sides have maintained enough back-channel communication to keep the process alive.

Potential Positives vs Negatives

Potential positives:

  • Iran agrees to a provisional framework: Brent could retrace toward $90 to $95 quickly as strait reopening expectations build, lowering fuel costs for airlines, shipping, and manufacturing.
  • A credible ceasefire extension: Even a vague "talks continuing" signal could dampen near-term oil risk premium and stabilize risk assets.
  • A deal would relieve inflation pressure, potentially giving the Federal Reserve more room to cut rates later in 2026.

Potential negatives:

  • Iran formally rejects or ignores the proposal: Oil risk premium could expand sharply. Brent above $110 is plausible if a hard rejection leads to new US strikes.
  • A rejection combined with fresh Hormuz clashes on Monday: Energy stocks would spike, broad equities would likely gap down, and safe-haven assets (gold, Treasuries, JPY) would rally.
  • Prolonged silence: Even continued ambiguity keeps oil elevated and uncertainty high, which compresses risk appetite heading into a fresh trading week.

What Could Happen From Here

Base case (40-50 percent probability): Iran delivers a qualified, conditional response over the weekend that keeps negotiations alive without committing to the US terms. Oil stays rangebound between $98 and $105. Risk assets open Monday with limited directional bias. Traders watch for a follow-up US statement on whether talks continue.

Confirmed by: US officials acknowledge receipt of an Iranian response and describe it as "under review." Invalidated by: Either side announces the process has collapsed or a major new strike occurs.

Upside case (20-30 percent probability): Iran signals meaningful acceptance of the interim framework. Brent drops sharply toward $90 to $95, US futures open higher Sunday night, and risk-on sentiment supports tech and cyclicals at Monday's open. Natural gas prices (via LNG shipping normalizing) could also ease.

Confirmed by: Reuters or AP reporting a "breakthrough" or "agreement in principle" from US and Iranian sources simultaneously. Invalidated by: Iran's foreign ministry denying the report or contradicting terms.

Downside case (25-35 percent probability): Iran formally rejects the proposal, or Trump announces the US is walking away from talks. Oil could spike 4 to 7 percent in overnight trading. Equity futures open lower. Energy and defense stocks outperform; consumer and growth sectors underperform. VIX (the Cboe Volatility Index, a common measure of expected US stock market volatility) would likely jump.

Confirmed by: An official statement from the White House or Iran's foreign ministry declaring negotiations over, or a new military exchange. Invalidated by: Backchannel sources indicating informal talks are continuing despite the public posture.

What Traders Should Watch Next (Next 24-72h)

  • Any White House or State Department statement on Iran's letter: Trump's own posts on Truth Social have moved oil prices during this conflict.
  • Al Jazeera and Iranian state media (IRNA): Iranian government channels often signal the official posture before a formal release.
  • Overnight Brent and WTI futures pricing (Sunday evening ET): Direction of the first oil futures candle after weekend news will set the tone.
  • S&P 500 and Nasdaq futures (Sunday 6 p.m. ET open): Watch for gap up or gap down vs. Friday's record close.
  • Strait of Hormuz shipping reports: Any movement of commercial tankers through the strait would be a major de-escalation signal.
  • Gold and Treasury yields: A risk-off signal would likely push gold above $3,000 and send the 10-year Treasury yield lower.

FAQ

Why does Iran's response matter so much for oil prices?
The Strait of Hormuz carries roughly 20 percent of global oil supply. As long as it stays closed or restricted, a structural supply shortfall keeps Brent crude elevated. Any sign that the strait could reopen changes the supply outlook materially and quickly.

Could US stocks fall sharply if Iran rejects the deal?
Equity markets have been partly pricing in a diplomatic resolution. A hard rejection removes that assumption and would likely pressure cyclical and consumer sectors. However, a sharp drop is not guaranteed since markets have shown resilience to war-related news in this cycle. The degree of any selloff would depend on whether new military action follows.

Sources

Traders navigating volatile markets during geopolitical dislocations benefit most from real-time discipline, not gut reaction. ChartDojo gives you AI-powered feedback on every trade so you can build real skills, not bad habits. Try it free and see how structured review changes your approach when the stakes are highest.

Header image source: pexels by Luca Sammarco. License: PEXELS.