Oil has dropped, stocks are rallying, and markets are breathing again. But this is only a pause, not the end.
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Yesterday, we said to watch oil prices at 8PM ET.
Now we have the answer.
Late Tuesday night, just before Trump’s deadline expired, the US and Iran agreed to a two-week ceasefire. The Strait of Hormuz, which had been effectively closed for five weeks and had become the centre of the global energy shock, will reopen for safe passage while both sides begin negotiations on a permanent deal.
Markets woke up this morning and exhaled.
This is the bull case we laid out yesterday.
Now the real question is what it actually means.
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What Was Agreed
Trump posted on Truth Social that Iran’s 10-point plan was a “workable basis” for negotiations.
Iran’s foreign minister confirmed that Tehran would allow two weeks of safe passage through the Strait of Hormuz while talks on a permanent agreement begin.
Formal negotiations are due to start Friday in Islamabad, with Pakistan acting as mediator.
Both sides are framing it as a win.
• Trump says the US has already “met and exceeded” its military objectives
• He also says Washington is “very far along” on a permanent deal
• Iran says the US accepted the “principles” of its proposal as the basis for talks
That is usually how ceasefires work. Both sides declare momentum, both sides claim leverage, and the real test comes after the headlines fade.
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What Markets Did
Markets reacted exactly the way you would expect.
• Oil dropped 13% overnight
• Brent crude fell below $95 a barrel
• European stocks surged almost 4%
The relief rally is real.
Gold, which had been climbing as investors rushed into safety, is pulling back. Crypto is catching a bid as risk appetite returns. In market terms, this is the exact risk-on move you would expect when the immediate threat of escalation fades.
This is scenario A playing out in real time.
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Why Investors Shouldn’t Get Too Comfortable
This is where the story gets more complicated.
This is not a peace deal. It is a two-week ceasefire.
Iran has reportedly set a 15-day maximum window for talks. If no permanent agreement is reached by then, the entire situation could snap back into place very quickly.
And the demands on the table are not minor.
Iran’s 10-point plan reportedly includes:
• Maintaining control over ship traffic in the Strait of Hormuz
• A full cessation of hostilities against its wider “Axis of Resistance”
• Withdrawal of all US combat forces from the region
That creates immediate friction.
Hezbollah in Lebanon is not covered by this ceasefire, and Israel has already confirmed support for the agreement while continuing strikes in Lebanon. That alone introduces a major risk to the durability of the deal.
As one hedge fund CIO put it, markets may be able to breathe for a few days.
A few days.
Not forever.
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What This Means For Your Money Right Now
The immediate impact is positive.
Oil dropping toward $95 is good news for inflation. It means the upcoming March CPI report on Friday, the first major inflation print since the conflict began, may not come in as badly as feared.
That matters because it gives the Fed some breathing room.
Rate cut hopes for later in 2026 have just regained a small lifeline.
Stocks should also continue to benefit in the short term as the fear premium starts to come out of the market. The backdrop was already improving from a contrarian perspective.
• AAII bearish sentiment had reached 51.4%
• Every time it has gone above 50% since 1987, the S&P 500 has averaged 16% returns over the following 12 months
Add a ceasefire to that and the short-term market picture improves.
Gold and silver may cool from their highs, but that does not mean the uncertainty is gone. It simply means the market is pausing the panic trade for now.
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The Bigger Picture
The speed of this reversal tells you something important.
Five weeks ago, one waterway pushed oil above $100, reignited inflation fears, boxed the Fed into holding rates, and helped send gold to $4,674 an ounce.
One ceasefire announcement reversed a significant part of that overnight.
That is your reminder that geopolitical risk is now one of the biggest drivers of your portfolio.
In the short term, it matters more than earnings. More than economic data. More than most of the fundamentals investors normally focus on.
Understanding that is no longer optional.
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What To Watch Next
The next two weeks are the real test.
Watch Islamabad.
Watch whether Iran’s demands get softened during negotiations.
Watch whether Israel’s continued operations in Lebanon start to destabilise the agreement.
And above all, watch oil.
If Brent starts climbing back above $100 during these talks, the market is telling you something very clearly:
It does not believe a permanent deal is coming.
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Bottom Line
This is a real relief moment for markets.
But it is not resolution.
It is a pause.
For now, that pause is enough to push oil lower, lift stocks, and ease pressure on inflation. But the hard part starts now, because the next two weeks will determine whether this becomes a genuine turning point or just another temporary break in a much bigger crisis.
