Hormuz Deal Hopes Crash Oil, Send Equities to Records — While Iran Denies the Talks Are Happening

The Relief Trade

Treasury Secretary Scott Bessent told CNBC’s Squawk Box on Tuesday morning that the U.S. and Iran could reach a deal to reopen the Strait of Hormuz as soon as that day or Wednesday, with “freedom of movement” for commercial ships. “We are in talks with the Iranians,” Bessent said. “There is a chance we may have a deal today or tomorrow to open the strait and move towards a more normalized position in this conflict.”^[1]

The market’s response was immediate and forceful. U.S. crude oil futures fell nearly 6% to trade below $76 per barrel. Brent crude dropped roughly 5% to near $79.^[1] The United States Oil Fund (USO) closed at $115.78, down 5.2% on the session as of 16:00 ET.^[2] Energy stocks followed: ExxonMobil (XOM) closed at $153.97, down 0.7%; Chevron (CVX) fell 1.4% to $190.40; the Energy Select Sector SPDR (XLE) slipped 0.5% to $58.52.^[2]

Meanwhile, equities surged to records. The Dow Jones Industrial Average closed above 54,000 for the first time.^[3] The S&P 500 pushed to a new all-time high near 7,665.^[3] The rally was broad — fueled by oil relief, sliding Treasury yields, and a blowout earnings report from Palantir (PLTR), which jumped 29.5% to $162.66.^[4] Caterpillar (CAT) surged 5.6% to $876.54 on earnings.^[4] The iShares 20+ Year Treasury Bond ETF (TLT) rose 0.8% to $82.82 as yields fell alongside oil.^[4] Even defense stocks held firm: Lockheed Martin (LMT) gained 0.5% to $589.13, and RTX added 0.6% to $217.93.^[4]

Secretary of State Marco Rubio confirmed the diplomatic track, telling reporters at the State Department that the U.S. is involved in talks between Oman and Iran on transit through Hormuz. “There’s been progress made in those talks but not finality yet,” Rubio said. “We’re hoping that will happen very shortly.”^[1]

What Hormuz Disruption Actually Looked Like

The scale of the disruption that markets are now unwinding is worth understanding. According to the United Nations, liquefied natural gas exports through the Strait of Hormuz declined by 95% during the crisis.^[5] Saudi Aramco’s CEO Amin Nasser said on Tuesday that the Iran-related crisis has cut shipping through the strait to a tenth of pre-conflict levels — what he called “the biggest supply shock in history.”^[5] Aramco has been routing crude around the strait via its East-West pipeline, but that bypass has capacity and security limits.^[6]

The chokepoint extends beyond energy. The UN noted that the disruption has hit fertilizer, refined products, and industrial gases — the same categories Bessent cited when he said, “We could see a big relief trade as those prices go down.”^[1]

Compounding the problem, the Houthis declared a naval blockade on Saudi Arabia, effectively shutting the Bab el-Mandeb Strait as well — meaning both major waterways for Persian Gulf oil to reach Asia-Pacific were constrained simultaneously.^[6] More than 80% of the energy moving through Hormuz is destined for Asian markets, leaving countries such as India, China, Bangladesh, and Pakistan heavily exposed.^[7]

The Pattern Nobody Is Talking About

Here is where the sentinel’s alarm sounds. The market is pricing a Hormuz deal that, by Tehran’s own account, may not be in progress.

President Donald Trump accused Iran of “duplicity” and insisted talks were underway — even as Tehran explicitly denied that any negotiations were taking place.^[7] Iran’s state media went further, dismissing the claims altogether.^[8] On the same day Bessent spoke of an imminent deal, a vessel was attacked near the Strait of Hormuz — an event that underscores how far the situation remains from resolution.^[7]

This is not the first time a Hormuz deal has appeared close. The U.S. and Iran signed a memorandum of understanding on June 17 to reopen the strait. Ship traffic briefly rebounded before the agreement collapsed over a dispute between Washington and Tehran on which route ships could use to transit — Iran wants vessels in its territorial waters; the U.S. has been escorting them through Oman’s coast. Iran then began attacking tankers that used the Omani route, and Washington responded with more than a dozen waves of airstrikes and a reimposed naval blockade.^[1]

The pattern is clear: a deal surfaces, the market rallies, the deal collapses over a specific and unresolved disagreement about transit sovereignty, and tensions escalate beyond the prior baseline. The June 17 MOU is the template, and the same structural disagreement — whose waters, whose rules — remains unresolved today.

What to Watch Next

Wednesday, August 5. Bessent’s “today or tomorrow” window closes. If no agreement materializes, the oil relief trade reverses sharply. Watch WTI for whether it holds below $76 or snaps back toward the $80–$85 range that preceded the weekend de-escalation signal.

Iran’s official response. Tehran has not confirmed talks are happening, let alone a deal. Any explicit Iranian government statement confirming negotiations — or rejecting them — will be the primary catalyst for the next leg in oil and risk assets. Qatar says mediators are making progress;^[7] Iran and Oman reportedly see progress on a deal;^[7] but until Tehran confirms, the market is trading a U.S. narrative, not a bilateral agreement.

The transit-route dispute. The June 17 MOU collapsed on exactly this question. If any new deal does not resolve whether ships transit through Omani waters under U.S. protection or Iranian territorial waters, it is likely to fail the same way. The wording of any announced agreement on this point is the single most important detail.

Tanker traffic data. Bessent said he was “already seeing quite a few ships coming out of Hormuz.”^[7] Real-time tanker tracking will confirm or contradict that claim faster than any press statement. If traffic does not materially increase within 48 hours of an announced deal, the market’s supply-shock premium will rebuild.

Energy vs. defense divergence. Energy stocks are selling the Hormuz-reopening story; defense stocks barely moved on the de-escalation news (LMT +0.5%, RTX +0.6%).^[4] The defense sector’s refusal to sell off suggests the market does not fully believe the geopolitical risk premium is going away. That divergence is worth monitoring — when defense and energy move in opposite directions on the same headline, one of them is wrong.

This article presents research and analysis for informational purposes only. It is not investment advice, and nothing here should be interpreted as a recommendation to buy, sell, or hold any security.