Equity markets across the globe soared and crude plunged Wednesday after US President Donald Trump announced the two-week halt in the war, and the Islamic republic said it would reopen the Strait of Hormuz as peace talks took place.
But with the deal less than a day old, cracks were already appearing as Tel Aviv said it did not include Israel’s fight against Iran-backed Hezbollah in Lebanon as it continued attacks on its northern neighbour.
That view was echoed by Vice President JD Vance, who said: “If Iran wants to let this negotiation fall apart… over Lebanon, which has nothing to do with them, and which the United States never once said was part of the ceasefire, that’s ultimately their choice.”
Iran said that broke terms of the deal as reports said the vital Hormuz waterway — through which a fifth of world oil and gas passes — was shut again. However, that came as Tehran announced alternative routes for ships travelling through the Strait, citing the risk of sea mines.
The country’s parliament speaker Mohammad Bagher Ghalibaf posted on X that the “workable basis on which to negotiate” had already been violated, making further talks “unreasonable”.
He listed three alleged US violations of the truce plan: the continued attacks in Lebanon, a drone entering Iranian airspace and a denial of the country’s right to enrichment.
Hezbollah said Thursday it had fired rockets towards Israel in response to its “violation”.
Meanwhile, a senior US official said Tehran’s 10-point plan was not the same set of conditions the White House had agreed to.
Fears that the ceasefire could fall apart while crude remains stuck in Hormuz saw West Texas Intermediate oil jump around 3% Thursday, having plunged more than 16% the day before. Brent was up more than 2% following a 13% drop.
Equities also gave up some of their gains.
Tokyo, Hong Kong, Shanghai, Sydney, Singapore, Seoul and Taipei were all down.
Attention is also turning to crunch talks in Pakistan that are expected on Friday or Saturday, with Vance leading the US delegation.
“Many questions remain with the 10-point plan that Trump has received from Iran (which includes Iranian control of the Strait of Hormuz, US acceptance of Iran’s uranium enrichment programme, the end of all sanctions and withdrawal of the US military from the Gulf region) is at odds with Trump’s 15-point peace plan,” wrote National Australia Bank’s Skye Masters.
Still, observers warned that an end to the conflict would not see a quick return to normal, with crude prices still elevated and key regional infrastructure targeted that could take billions of dollars and at least months to repair.
Shipping journal Lloyd’s List estimated around 800 ships have been stuck in the Gulf since the end of February, when hostilities broke out.
Still, Forex analyst Fawad Razaqzada said: “Investors are confident that oil prices could ease further and the Strait of Hormuz will re-open again and hopefully stay open beyond the two-week ceasefire period.”