Insights 
VT 
Iran is considering a nuclear deal with the U.S., centred on a regional uranium enrichment consortium. The deal’s success hinges on the consortium being based within Iranian borders.
Experts caution against premature optimism regarding the deal’s outcome. The agreement, if successful, could impact oil markets by potentially leading to an increase in Iranian oil supply, which would be negative for oil prices.
Uranium Enrichment Conditions
The current draft of the proposed nuclear deal suggests that Tehran may accept international oversight of its uranium enrichment, but only if the enrichment activities occur domestically. That condition keeps control within their territory, which has long been a sticking point in previous negotiations. The tone remains cautious among analysts, particularly as similar efforts in the past have stumbled at critical junctures.
From our perspective, if talks progress further and a framework begins to take form more publicly, then the energy markets could begin to price in longer-term scenarios. That may mean more Iranian crude entering the market, and as a result, benchmark oil prices could come under downward pressure even before any shipments resume. It’s a supply story tied directly to a geopolitical one — with implications far beyond energy itself.
When Mehdi laid out the expectations inside Tehran last week, the language was deliberate, pointing to a desire for control but also for economic relief. Their incentive is primarily financial. Removing some of the current restrictions would open up previously closed revenue paths, and for markets, that means added volumes that weren’t accounted for only a month ago.
We’ve already begun to notice that some forward contracts have started to reflect this possibility. There’s an increase in put option activity on Brent for later in the year, coupled with a softening in implied volatility over the last three sessions. That kind of behaviour often happens before confirmation events. Traders aren’t betting on the near-term move but are positioning for a medium-term change that would lower price expectations across most curves through winter.
Negotiation Dynamics
Jafari, the negotiator involved in initial contact, spoke mid-week of possible breakthroughs, but added several caveats. It’s not overactive jawboning, it’s groundwork being laid with purpose. His remarks gave the market a brief moment of recalibration, which shows in the steepening of the back end of the curve around March contracts. That tells us positioning is shifting slightly – not a reversing trend yet, but the direction has started to adjust.
Against this backdrop, our approach must lean towards scenario-based tracking. This means planning for a softer oil environment in early 2025, and holding fewer high-beta energy positions for shorter durations. Where previously longer-dated calls made sense for energy-exposed assets, now the dynamic warrants more agile rotations into names or sectors with less headline sensitivity.
The options data also reveals more hedging interest in commodity-sensitive equities, more defined by weekly expirations than monthlies, perhaps due to heightened event risk. It’s not a full unwind of the reflation trade, but pockets of caution are clearly there.
Firms who rely on tight spreads in energy markets may consider revisiting margin assumptions. As policy and political timelines remain fluid, there’s an incentive to keep hedging structures nimble. That’ll mean more use of options ladders and calendar spreads to buffer for possible moves once any official word hits. We’re already seeing that in the way volume is loading into September and November maturities, particularly in gasoil and distillates.
In this environment, timing matters more than directional conviction. If a deal finds traction and barrels return to the system faster than the market handles comfortably, volatility won’t just persist – it’ll widen briefly before normalising. Being early will not reward as it used to if the policy trigger arrives mid-cycle.
