By Bas van Geffen, senior macro strategist at Rabobank
Striking
Trump said that he had delayed a planned military strike on Tuesday, at the request of Qatar, Saudia Arabia, and the UAE. According to Trump, the leaders of the Gulf states had asked the US to call off the attack because “serious negotiations are now taking place,” which could lead to a deal that is acceptable to the US and its Middle Eastern allies.
In earlier stages of the conflict, such news would probably have caused a rally in stocks. But it seems that buyers may be on strike, or are at least fatigued. The S&P 500 briefly jumped from its intraday low, but this was insufficient to end the day in the green. Asian equity markets are trading relatively close to home today, too.
Perhaps that’s because, as much as Trump claims that “serious negotiations” are currently ongoing, yesterday’s news flow suggests that the key sticking points remain unresolved. So, this is either a genuine last attempt to get to a peace deal that the Gulf states may prefer over the damage from war, or it is another flip-flop after Washington rejected an Iranian draft plan that was made over the weekend.
Iran may have since made a new proposal. Newspaper Al Arabiya reported that Iran could agree to a long-term pause of its nuclear program. And instead of demanding war reparations, Iran now reportedly asks for economic concessions. Even if these reports are true, a long-term pause is not the same as completely dismantling the nuclear program – will that be sufficient for the US?
The New York Post suggests it is not. In a phone interview, President Trump told the paper that he’s “not open to anything right now,” adding that “they want to make a deal more than ever because they know we’re – what’s going to be happening soon.” However, separately, Trump has also said that he could agree to an Iranian commitment not to pursue nuclear weapons – if the Gulf states are content with that.
Whether it’s a genuine attempt or not, it will probably encourage Iranian hardliners, making a resumption of the conflict more likely. Tehran still seems to be digging in. Iranian media reported that fundamental differences between the two sides remain. Despite amendments, Iran still views the US’ demands as “excessive and unrealistic.”
So, a darker scenario of a return to bombing campaigns may be averted – for now. And lack of escalation or resolution of the conflict means that financial markets continue to wait for new direction – sending oil prices sharply higher or lower, depending on whether the outlook improves or suddenly deteriorates. Meanwhile, the US Treasury has extended the sanctions waiver on Russian crude until June 17, after the previous waiver expired a few days ago – to contain price spikes where possible.
However, as we noted yesterday, a grinding stalemate would be bad enough for global energy stocks, and economic outlooks. The International Energy Agency warned that stockpiles are “depleting very fast.”
That’s not yet the case everywhere. European refiners and airlines are backtracking on their earlier warnings that kerosine could run out over the summer. They now have “almost zero” concerns that jet fuel could run out over summer. Refiners have increased production, and higher imports from the US, Nigeria and Norway have also helped to stabilize supply. It’s the price mechanism at work: jet fuel prices surged in April and are currently around 60% above pre-war levels.
CHART OF THE DAY: The global jet fuel market is small, accounting for <7.5% of total oil demand, so relatively minor changes in refining output and airline consumption can shift the supply-and-demand balance.
And refiners are on “max” jet fuel mode 📈⤵️.
Link on reply pic.twitter.com/R9zugMljlJ
— Javier Blas (@JavierBlas) May 18, 2026
Higher prices may incentivize redirection of supplies to areas that can afford them, but those countries that cannot are starting to face supply constraints. Several Asian countries have already been grappling with shortages, and the double blockade of the Strait of Hormuz has thrown Cuba in a full-blown energy crisis.
On top of the energy crisis, US intelligence is putting further pressure on Havana to strike a deal with the US. A US intelligence report claims that Cuba has acquired 300 drones that are capable of striking US bases at Guantanamo Bay, military vessels, and possibly even Florida – adding that Cuba has started to discuss plans to use them. Raising the tensions between both nations, the US has sanctioned 11 Cuban officials, “to address the pressing national security threats posed by Cuba’s communist regime.”
Havana, in turn, is concerned that the report would be used as pretext for a military operation against it. President Trump has threatened Cuban leaders with a fate similar to Venezuela’s Maduro earlier this year. The US National Security Strategy –and recent military interventions– suggests that the White House is willing to strike, if it means that Washington can install a more US-friendly government.
Indeed, developments since the start of the year indicate that the Trump administration continues to seek more control over its hemisphere. The world may have forgotten about Greenland for a bit, but Trump reportedly has not.
Talks about US-Greenland relations have been ongoing for the past couple of months. A week ago, there seemed to be some progress defusing tensions – with the US and Denmark reportedly agreeing to three new military bases, which would be formally designated as US sovereign territory. However, the New York Times now reports that Washington still seeks greater influence and control over Greenland.