Iran-US Draft MOU Signals Easing of Gulf Tensions

Iran's State TV reported that a draft memorandum of understanding between Iran and the United States calls for US forces to withdraw from the vicinity of Iran and for the lifting of blockades. The report, if verifiable, represents a material de-escalation of the military standoff in the Persian Gulf, a region that carries a persistent Strait of Hormuz transit risk premium in global markets.

The simple read is straightforward: reduced geopolitical tension lowers the oil price risk premium. Brent crude would likely drop on the news, which weakens petrocurrencies such as the Canadian dollar and Norwegian krone while boosting net oil importers like the euro and yen. The better market read is more nuanced. The draft MOU targets the two most disruptive scenarios traders hedge against – a blockade of Iranian exports and direct US military presence near Iranian waters. Removing those tail events forces a unwind of safe-haven positioning that had been built into USD/CHF, USD/JPY, and long-dated gold futures over the past quarter.

Draft MOU Cuts Strait of Hormuz Risk Premium

The draft, as described by Iranian state media, would disband the core friction point in the Gulf: US naval patrols close to Iranian territorial waters and the associated embargo on Iranian oil shipments. For forex markets, the implication runs through two channels. First, shipping insurance costs for tankers transiting the Strait of Hormuz fall, lowering the frictional cost of crude supply. Second, the probability of a sudden supply outage from a military incident drops below the threshold where traders keep volatility hedges active. The global risk appetite metric, as proxied by EUR/USD and the AUD/USD cross, should reprice upward as the tail risk of a Gulf conflict recedes.

Oil-Linked Currencies and Safe Havens Face Repricing

The three most directly exposed currencies are the Norwegian krone, Canadian dollar, and Russian ruble. All three carry a positive correlation to Brent crude prices. A sustained drop in the risk premium undermines their carry advantage relative to low-yield safe havens. Simultaneously, the Swiss franc and Japanese yen lose their crisis-bid support, meaning the repricing is symmetrical. The euro, as a large net oil importer, benefits from both lower energy costs and a rotation out of USD-denominated safe havens. EUR/USD could test resistance levels that held during the previous escalation cycle if the draft gains official US backing.

The report is attributed to Iran's State TV without independent confirmation from US officials or international mediators. That introduces execution risk. The draft MOU may be a negotiating position rather than a final text. Markets will treat the move as a credible signal only if the US State Department or the Oman mediation channel confirms the substance. Until then, the price action reflects a short-covering rally in risk currencies rather than a permanent shift in positioning.

What Confirms or Weakens the Setup

Confirmation requires either a formal statement from Washington or a visible reduction in US naval patrols in the Gulf. The two most concrete on-the-ground markers are changes in tanker traffic through the Strait of Hormuz and a drop in war risk premiums quoted by maritime insurers. If neither moves in the next 48 hours, the draft MOU will be treated as propaganda and the risk premium will reemerge. Traders should watch the Brent crude prompt spread and the USD/TRY cross for real-time hedging shifts.

For a broader framework on how Gulf risk events affect forex positioning, see our recent analysis: Iran-US Draft Reshapes FX Risk Premia on Strait of Hormuz. Additional context on safe-haven flows is available in the forex market analysis section.

The next decision point is the US response. If the White House confirms the draft, expect a sustained unwind of crisis hedges across G10 FX and a rotation into carry trades. If Washington denies it, the premium snaps back harder than it fell.