NEW YORK/SHANGHAI — Traders head into the final week of March focused on a fresh round of indirect negotiations between Washington and Tehran that could loosen sanctions on Iranian crude and jolt global oil flows, market participants said Monday.
Senior U.S. and Iranian envoys are expected to meet through European mediators in Muscat on Tuesday, according to two diplomatic sources briefed on the itinerary. Wall Street dealers told Bloomberg terminals the talks are the single biggest wild card for energy prices after Brent crude oscillated between $75 and $78 a barrel last week.
“If even a few hundred thousand barrels a day come back, that changes the supply calculus overnight,” said Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group. Energy shares already reacted: the S&P 500 Energy Index shed 2.3% last week, erasing most of March’s earlier gains.
Across the Pacific, Chinese regulators signaled similar unease. People familiar with the matter said the National Development and Reform Commission convened an internal meeting Friday urging state-owned refiners to draw up contingency plans for price swings. The Shanghai Composite slipped 1.2% last week, while the technology-heavy STAR 50 fell 2%, hurt by weaker-than-expected real-estate data and uncertainty over export demand.
Currency desks are also on alert. A meaningful decline in crude would likely strengthen the yen and yuan against the dollar as energy importers’ trade balances improve, said Minori Uchida, chief FX analyst at MUFG Bank.
Meanwhile, U.S. macro releases—including February durable-goods orders on Tuesday and the Fed’s preferred inflation gauge on Friday—could add layers of volatility. “A dovish PCE print paired with lower oil could reignite the soft-landing narrative,” said Victoria Greene, chief investment officer at G Squared Private Wealth. “But a breakdown in talks or a spike above $80 would flip that script instantly.”
Analysts expect thin volumes ahead of the Easter holiday in Western markets and the Qingming Festival shutdown in China on April 4. Options pricing compiled by Trade Alert shows implied swings of 1.7% for the S&P 500 and 1.9% for the CSI 300 this week, well above their 12-month averages.
Whether diplomacy produces a breakthrough or another stalemate, energy remains the fulcrum. “Until we know if Iranian barrels are coming back, every other trade is secondary,” said a London-based crude broker. “Oil is the hinge on which equities will turn—New York, Shanghai and everywhere in between.”