Source: Sharecast
The fragile ceasefire, agreed a fortnight ago, is due to end on Wednesday, and officials from both countries are slated to meet in Pakistan ahead of that to resume peace talks.
However, Iran has yet to officially confirm it will attend, insisting the US Navy needs to lift its blockade of the Strait of Hormuz first. The US vice president JD Vance is set to lead the American delegation to Islamabad, though he has yet to leave Washington. Trump told Bloomberg he would "not be rushed into making a bad deal. We’ve got all the time in the world". But he also insisted that an extension of the current truce was "highly unlikely".
Markets, increasingly used to both the volatility of the conflict and the mixed messaging surrounding it, were generally muted in response on Tuesday. Benchmark Brent crude was largely unchanged at $95.19 a barrel, though West Texas Intermediate was off 2% at $88.04. European equities were also largely flat, with the FTSE 100 up just 21 points as at 1100 BST.
Russ Mould, investment director at AJ Bell, said European markets were treading water ahead of the next update on the peace talks.
He continued: "Oil prices remain below $100 a barrel, which suggests cautious optimism that the Middle East conflict won’t intensify. However, the longer oil remains in the $90s range, the higher the chance of an inflationary shock and a wobble to global economic activity."
Neil Wilson, Saxo UK investor strategist, said: "Traders are clearly sensitive to Iran news, but by degrees increasingly less so the more the direction of travel remains towards peace/deal/transaction. That suggests a degree of complacency that will be exposed should things go south with the talks this week. Talks are mooted and could happen in Pakistan any time - but the threats keep coming in."