#IranUSConflictEscalates

Tensions between the US and Iran escalated again at the beginning of May. The most serious test of the one-month ceasefire is underway. The sides exchanged fire, but diplomatic channels remain open.

Course of the Conflict

Exchange of Fire in the Strait of Hormuz
On Thursday, May 7, the US Navy clashed with Iranian forces in the Strait of Hormuz. The Iranian military stated that the US targeted two ships and carried out air strikes on Qeshm Island and the Bandar Khamir-Sirik coast. US Central Command said Iran attacked three navy destroyers with missiles, drones, and small boats, and in response, missile and drone sites were hit.

Trump said he still considers the ceasefire valid and tried to downplay the incident. Iranian state media also reported that the situation had returned to normal.

Intervention Against Tanker
On May 6, the US stopped an Iranian oil tanker in the Gulf of Oman by hitting its rudder. Central Command said the tanker was trying to break the US blockade on Iranian ports. Trump warned that if Tehran does not agree to a deal, bombardment will continue more severely.

Diplomatic Traffic

Search for a Short-Term Agreement
Washington and Tehran are working on a one-page memorandum of understanding to stop the war. The plan consists of 14 items. The goals are to formalize the ceasefire first, then reopen transit through the Strait of Hormuz, lift US sanctions, and place limits on Iran’s nuclear program.

Sources say the agreement is not finalized yet, but the sides are closer than ever. Iran wants to leave nuclear issues to a second stage, while the US wants to stop the conflict first.

Congress and Domestic Politics
War powers are being debated in the US Congress. Republican Representative Tom Barrett introduced a bill granting President Trump limited and time-bound authority to prevent Iran from acquiring nuclear weapons. The bill bans deploying ground troops and pursuing regime change. Democrats argue that using force without Congressional approval is unconstitutional.

Market Impact

Oil and Energy
With news of the conflict, Brent crude rose to 97 dollars and US crude to 96.8 dollars. The Strait of Hormuz is a critical route through which about 20 percent of the world’s oil passes. Iran continues to threaten to close the Strait. Analysts note that a prolonged closure would create a shock to the global economy.

Financial Markets
S&P 500 futures fell 0.2 percent. The yen is trading at the 156.88 level. Risk-off sentiment is observed in non-US markets. Ahead of US Treasury Secretary Scott Bessent’s visit to Tokyo, the market is watching Japan’s currency policy.

Expectations and Risks

Possible Scenarios
1. If a short-term agreement is reached, the Strait of Hormuz will open, oil prices will pull back, and risk appetite will recover. 2. If talks stall, the Trump administration could increase bombardment. In this case, new highs in energy prices and selling pressure in equities are expected. 3. If Congress limits war powers, it could narrow the White House’s military options and make a diplomatic solution necessary.
Headlines to Watch
Commercial vessel transits in the Strait of Hormuz, the text of the US offer to Iran, Iran’s stance on enriched uranium stockpiles, and the calendar before the US Congressional recess starting May 21.

Summary
The US-Iran conflict continues with limited clashes within a ceasefire. The sides are at the table for a one-page temporary agreement. The Strait of Hormuz and the nuclear program are the most critical issues. If no deal emerges, volatility in energy markets and deterioration in global risk sentiment could continue.

Do you think the Strait of Hormuz will fully reopen to trade soon? Share your view.
#GateSquareMayTradingShare
#Gate广场五月交易分享