Global oil markets and related currencies experienced heightened volatility as reports emerged of ongoing US-Iran negotiations for a potential 45-day ceasefire, with regional mediators involved in the talks. According to Bloomberg, citing Axios, the discussions could lead to a permanent end to the war, but unnamed sources indicated that the chances of reaching a deal within the next 48 hours are low [1][2][3]. US President Donald Trump stated that the US is in deep negotiations with Iran and suggested a deal is likely before his Tuesday deadline, while also warning Iran to reopen the Strait of Hormuz or face strikes on key infrastructure [1][2].
Oil prices responded sharply to these developments. West Texas Intermediate (WTI) retreated to around $103.30–$102.80 per barrel during early European trading hours on Monday, after previously registering over 10% gains in the prior day [2][3]. Brent crude climbed 1% to $110 a barrel as trading began, remaining only slightly below the $120 peak reached last month [4]. The International Energy Agency (IEA) described the closure of the Strait of Hormuz and recent attacks as the biggest supply disruption in market history [4]. OPEC+ raised production quotas for May by 206,000 barrels per day, but warned that damage to Middle East energy infrastructure would prolong supply tightness even after hostilities end [3][4].
Currency markets reflected these oil price movements and geopolitical risks. The Australian Dollar (AUD) held firm around 0.6910 against the US Dollar (USD), supported by risk-on sentiment from ceasefire optimism, though stronger-than-expected US jobs data and expectations for the Federal Reserve to maintain high rates could create headwinds for the pair [1]. The Reserve Bank of Australia (RBA) raised its Official Cash Rate to 4.10% in March, with market expectations leaning toward another hike in May due to rising oil prices and a tight labor market. Westpac analysts anticipate three further RBA hikes in 2026, potentially taking the rate to 4.85% [1].
Meanwhile, the EUR/CAD pair traded around 1.6070, with the Euro remaining strong amid a hawkish European Central Bank (ECB) stance, while the Canadian Dollar (CAD) struggled due to easing oil prices. The CAD's weakness was attributed to its commodity-linked nature and Canada's status as the largest crude exporter to the US [2].
Looking ahead, traders are awaiting the American Petroleum Institute (API) report due Tuesday, which could further influence oil prices depending on inventory data [3]. OPEC+ signaled readiness to adjust production quickly if the situation in the Persian Gulf changes [3].
CONCLUSION
Oil and currency markets remain highly sensitive to developments in US-Iran ceasefire negotiations and ongoing supply disruptions in the Middle East. Despite some easing in oil prices on ceasefire optimism, the market remains tight due to historic supply shocks and infrastructure damage, with OPEC+ and central banks poised to respond to further changes. Investors are closely monitoring upcoming data and geopolitical events for further direction.