At the heart of the issue is a deep trust deficit. The two sides are still not engaging directly and continue to rely on intermediaries. Even planned negotiations have struggled to take off, signalling that neither side is convinced the other is willing to compromise.
Pal added, “The ceasefire is literally hanging by a thread. It’s very tenuous. Both sides will want to show in some way that they are in control, they have leverage.”
Domestic pressures are also shaping the trajectory. In the US, political considerations — including upcoming elections and falling approval ratings — are pushing for de-escalation. Iran, meanwhile, is dealing with its own internal dynamics, with signs that its negotiating stance has hardened in recent weeks.Pal noted that both sides still want a ceasefire, but the path to a lasting resolution is unclear. “The end game is difficult to predict right now, largely because everyone is taking one step at a time,” he said.
For markets, the bigger concern lies in commodities — especially oil. Supply disruptions have intensified, with blockades affecting flows that were previously still moving. A significant volume of oil remains stranded, adding to uncertainty.
Pal stated that while crude prices have so far stayed below the $100 per barrel mark, the risk of a sudden spike remains. Any escalation or breakdown in talks could quickly tighten supply further and push prices higher.
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