Senior diplomats from the United States, Iran, and Pakistan have produced a final ceasefire draft during three days of intensive talks in Islamabad, according to officials briefed on the negotiations. Kalshi and Polymarket contracts tied to a signed agreement before May 1 jumped to 85% on Friday from 58% a week earlier, as markets priced in the most credible off-ramp since the conflict began in late February.
Iranian Foreign Minister Abbas Araghchi is said to have accepted the principle of phased reopening of the Strait of Hormuz to neutral-flag shipping, with verification managed by a Pakistani-Omani joint monitoring commission. In exchange, the United States would suspend fresh sanctions and unfreeze approximately $6.2 billion in Iranian central-bank assets held in South Korean and Japanese escrow accounts.
Wall Street Rally Accelerates
The S&P 500 jumped 1.8% to 7,234 on Friday, the Dow added 478 points to 47,029, and the Nasdaq rose 2.1% to 22,518. The CBOE Volatility Index collapsed to 16.8, its lowest reading since the conflict began, while Brent crude fell 4.3% to $99.20 per barrel as traders priced in the return of Gulf supply. The dollar weakened to 104.8 on the DXY as safe-haven flows unwound.
European equities followed Wall Street higher, with the Euro Stoxx 50 gaining 1.6% to 5,312 and the German DAX adding 1.9%. The FTSE 100 climbed 1.2% to 8,948. Japanese and Korean markets — most exposed to Gulf energy supply disruptions — rallied overnight by 2.4% and 2.7% respectively.
Oil Traders Reposition for Supply Return
ICE Brent open interest in June contracts collapsed by a record 184,000 lots on Friday as speculative long positions were unwound. Goldman Sachs now sees Brent averaging $82 per barrel in Q3 if the deal holds, down from its prior $95 estimate, while Morgan Stanley trimmed its forecast to $85. The U.S. strategic petroleum reserve, which had been drawn down to 312 million barrels, will begin refilling at roughly 1 million barrels per day starting in June if the ceasefire is signed.
Skeptics caution that previous ceasefire drafts have collapsed over verification disputes, and Iranian Revolutionary Guard Corps factions have publicly opposed earlier versions. Treasury Secretary Scott Bessent emphasized that "sanctions relief is conditional and reversible" and that U.S. naval forces will remain deployed in the region regardless of any agreement.