US and Iran Pause Military Strikes Amid Diplomatic Talks

The United States and Iran reached a fragile ceasefire on July 25, 2026, ending a 13-day campaign of military strikes. President Donald Trump halted the bombing campaign after advisers warned that the military was depleting its arsenal and running out of targets. UN Ambassador Mike Waltz stated that Trump was "giving talks some space" to facilitate diplomacy. In return, Iran announced it would halt retaliatory attacks provided the U.S. maintained its pause.

To ensure the flow of energy, Iran and Oman entered discussions regarding "common principles and operational mechanisms" for safe shipping through the Strait of Hormuz. While these talks aim to restore maritime traffic, shipping volumes remain low and Iran-aligned Houthi rebels continue to attack Saudi Aramco facilities and oil installations along the Red Sea coast, specifically in Jizan and Yanbu.

The de-escalation caused Brent crude oil prices to tumble from near $100 per barrel toward $90, falling over 5% on July 27. This price drop eased global inflation fears and weakened the U.S. dollar, which in turn boosted gold prices toward $4,100 per ounce. Financial markets reacted positively, with gains seen in the Australian S&P/ASX 200 and Pakistan's KSE-100 Index.

Investors remain cautious as they await the July 28-29 Federal Reserve meeting under Chair Kevin Warsh to determine if interest rates will remain unchanged or increase in September. Markets are also monitoring upcoming earnings reports from megacap technology firms including Apple, Amazon, Meta, and Microsoft.