Australian shares recover from $45B loss as US-Iran deal talk shifts crude oil supply calculus. Next catalyst: IAEA report or direct talks.
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Australian shares are recovering from a sharp session that erased roughly $45 billion in market value. The bounce comes alongside a reported comment that the US and Iran have the “makings of a deal,” a phrase attributed to an unnamed official after recent indirect talks. For commodity markets, that statement shifts the focus back to a question that has lingered for months: whether Iranian crude will return to global supply.
The $45 billion wipeout – which hit energy and resource stocks hardest – had been tied to a combination of rate-hike repricing and a sudden drop in crude oil prices. Now the rebound suggests investors are recalibrating their assumptions about both geopolitical risk and supply.
Current US sanctions cap Iranian crude exports at roughly 500,000 barrels per day, well below the country’s pre-sanction capacity of about 2.5 million bpd. A nuclear agreement that lifts those restrictions could free up an additional 1.5–2 million bpd of supply within six to twelve months. That volume is large enough to offset a meaningful portion of the OPEC+ production cuts currently supporting prices.
Traders have priced in a low probability of a deal for most of 2025. The “makings of a deal” comment changes that calculus. If formal negotiations gain traction, the risk premium in crude futures will compress, pulling Brent and West Texas Intermediate lower. Australian energy producers such as Woodside Energy and Santos derive a large share of revenue from oil-linked contracts, making them directly exposed to such a move.
Today’s recovery in Australian equities does not necessarily mean the market has dismissed the supply risk. More likely, it reflects a rotation out of the defensive and bond-proxy sectors that held up during the sell-off and back into beaten-down resource names. The ASX 200 energy index rose 1.8% in early trading, recouping part of the prior session’s 4% loss.
For traders watching crude, the key metric is the prompt-spread structure of Brent. A widening of the backwardation would indicate the market still sees tight supply, despite deal chatter. A move into contango would confirm that traders are building a supply-overload scenario into forward prices.
The US-Iran dynamic remains binary. A formal resumption of the JCPOA framework would trigger a bearish repricing across the oil curve. A breakdown in talks – or a lack of follow-through – would restore the risk premium and probably send Brent above $80 again. The next concrete signal will come from the IAEA’s quarterly report on Iranian enrichment activity, due within weeks. If the agency confirms compliance steps, the supply narrative will accelerate.
For now, the “makings of a deal” comment is a placeholder. Traders should watch for any named official attribution or a timeline for direct talks. Without that, the bounce in Australian shares is more likely a relief rally than a structural turn in the commodity thesis.
Related analysis: commodities analysis | crude oil profile
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