US-Iran peace framework advances; Brent crude slides 14% from $126 to ~$108 as Hormuz reopening looms

Framework Provisions: Nuclear Moratorium, Sanctions Relief, Hormuz Reopening

A US-Iran peace framework advanced significantly as of May 6, 2026. Proposed terms contain three core provisions: (1) a moratorium on Iran's nuclear enrichment activities, (2) relief from US sanctions and release of frozen Iranian assets, and (3) formal reopening of the Strait of Hormuz to commercial maritime traffic. Iran is expected to respond within two days, with Pakistan acting as the mediating party.

Oil Market Reaction: Brent at $108, WTI Below $100

Energy markets moved decisively in anticipation of the deal. Brent crude fell from approximately $126 per barrel last week to around $108 — a decline of roughly $18 per barrel, or 14%. WTI crude dropped below the psychologically important $100 level. The Strait of Hormuz handles approximately 20% of global oil trade, and the prospect of its uninterrupted reopening has effectively lifted the geopolitical risk premium that crude markets had been pricing in through Iran's conflict-driven disruptions.

Equity Markets Rally on Risk-Off Reversal

US equity futures rose broadly. S&P 500 futures gained 0.9% and Nasdaq 100 futures rose 1.5%, with the VIX volatility gauge falling 3.97% to 16.69. Approximately 85% of S&P 500 companies that have reported Q1 2026 earnings beat consensus profit estimates, and 77% delivered revenue surprises. The combination of earnings strength and a potential resolution to a major geopolitical risk driver is compressing the equity risk premium.

Gold Holds Elevated Level Despite Deal Optimism

Notably, gold rose 2.69% to $4,691.60 per ounce despite the reduced geopolitical risk signal from the Iran framework. This suggests markets are not fully pricing in a completed deal — the 48-hour response window introduces meaningful residual uncertainty — and that gold's structural bid from central bank reserve diversification and US fiscal concerns remains intact.

What to Watch

The critical near-term event is Iran's formal response, expected within 48 hours. A positive response would likely push Brent below $100 and could trigger a broader relief rally in risk assets. A negative or conditional response would partially reverse crude's decline. Key follow-on questions include sanctions timeline, frozen asset release mechanics, and verification protocols for the nuclear enrichment moratorium.