1. Current Situation: Ceasefire continues on the surface, but underlying tensions are brewing.
As of the end of April 2026, the US-Iran conflict remains in a fragile ceasefire. On April 22, the 14-day temporary ceasefire agreement expired, and Trump announced an indefinite extension of the ceasefire, which Iran welcomed as a means to resolve issues through dialogue. However, this has not led to any substantial reconciliation.
On the military front, the Strait of Hormuz is effectively still under blockade, with only 4 vessels passing through on April 27. Iran's oil exports have nearly come to a standstill—daily shipment volumes plummeted from about 1.85 million barrels in March to around 567,000 barrels. Iran's oil tank reserves are continuously accumulating, and projections indicate they will be at full capacity in 12 to 22 days, at which point Iran may be forced to cut production by another 1.5 million barrels per day.
On the diplomatic front, Iran formally proposed a three-stage negotiation framework on April 27—first thoroughly ending the war, then discussing the management of the Strait of Hormuz, and finally addressing nuclear issues; the US insists on placing the nuclear issue as the primary negotiation content, with both sides' core demands completely misaligned. Trump has also made it clear that what he wants is a "permanent" agreement and is not in a rush.
As international opinion suggests, the US and Iran are caught in a "frozen conflict"—the risk of renewed hostilities is high, but neither side is willing to fully engage in war.
II. Three possible scenarios for May
Scenario A: Breakthrough in temporary agreements (probability about 30%)—one side makes concessions or international mediation facilitates a limited agreement. Commonwealth Bank strategists have publicly stated that the US-Iran conflict could end in May rather than the previously expected June, pointing out that the US is "tentatively open to compromise". The economic consequences of the conflict are accumulating, and if negotiations break down, the market will react strongly negatively. Fortress Securities also predicts a possible arrangement of "freeze for freeze" aimed at buying time, reducing the risk of conflict escalation, and stabilizing the oil market.
Scenario B: Stalemate continues (probability about 45%)—this is currently the most likely scenario. The demands of both sides are seriously misaligned, and there is a huge trust deficit; Iranian moderates have not received full authorization, the Revolutionary Guards remain staunchly anti-US, while the US has clearly stated it will not send a negotiating team to Pakistan. The latest report from CCTV on April 29 also assessed that the US-Iran situation may remain in a state of "neither war nor talks" for some time. The duration of this stalemate will directly determine the specific timing and scale of Iran's passive production cuts in mid-May.
Scenario C: Escalation again (probability about 25%)—if Iran's oil storage facilities reach full capacity (expected mid-May), Tehran may take more extreme self-rescue measures; voices within the Trump administration also advocate for more aggressive military actions. Under this pressure, the risks of misjudgment or tentative escalations from both sides cannot be ignored.
III. The transmission pathways for major asset classes.
Oil: Mid-May is the dividing line for bulls and bears.
Oil is undoubtedly the asset most directly affected by the US-Iran situation. The current market shows a typical "high volatility and waiting" pattern:
Supply-side pressures continue to accumulate. Due to US military blockades forcing a sharp decline in exports, global oil market shortages are deepening, and if combined with Iran's passive production cuts, the production gap will further widen. US gasoline prices have surpassed $4 per gallon, significantly raising the energy cost baseline, and the lagging effects of high oil prices are expected to persist throughout 2026.
Oil price projections under different scenarios:
· If the ceasefire can be maintained (stalemate continues), experts predict that oil prices will likely stay in the $90 to $95 per barrel range, with Zhongtai Securities maintaining a forecast of $90 per barrel for Brent crude in 2026.
· If the conflict escalates again, oil prices could soar to $120 per barrel; during the conflict, prices fluctuated from peaks of $110-115 to $87-95.
· In extreme scenarios (prolonged conflict), some analysts even warn that oil prices could touch $150.
· If negotiations make a breakthrough, oil prices could drop rapidly as supply risk fades.
A key observation for May is the specific timing of Iran's oil storage facilities reaching full capacity. Once forced production cuts become a reality, oil prices may see a new pulse upwards.
US stocks: Geopolitical pricing is becoming dulled, but tail risks remain.
The US stock market's reaction to geopolitical conflicts is becoming complex. On one hand, current quarterly earnings indicate that about 80% of companies exceeded expectations, with the S&P 500 projected to see a 12.6% profit growth in Q1 2026, and the fundamentals are still providing support.
On the other hand, institutions generally believe that the market's expectation for the US-Iran tug-of-war has been "fully priced in"; investors' sensitivity to geopolitical factors is gradually dulling, but reactions to marginal changes and new variables will be more acute. Fortress Securities' view is that as the conflict eases, both US stocks and bonds are likely to rise.
However, this view is based on the core assumption that "conflict will not escalate sharply again". Institutions have also clearly pointed out that the long-term impact of the conflict on global economic growth and corporate profitability remains to be assessed; previous expectations have not shown any adjustments, and if the situation turns sharply downward, the market could experience a prolonged cycle of contraction. Strategists are clearly warning: if negotiations break down due to political constraints, the market will react with a "strong negative response".
A concerning linkage is that if Iran is forced into large-scale production cuts in mid-May, raising oil prices, energy costs will amplify layer by layer along the supply chain, spreading from transportation costs to consumer-side inflation. At that point, the tension between optimistic corporate profit expectations and geopolitical tail risks will become increasingly acute. This could be the biggest potential disruptor for US stocks in May.
Digital currencies: The safe-haven narrative faces a reality check.
Digital currencies currently exhibit two contradictory features: on one hand, institutions continue to accumulate (Strategy has added 3,273 Bitcoins during this period); on the other hand, geopolitical risks are persistently suppressing market risk appetite, and the uncertainty surrounding US-Iran negotiations has become a key short-term factor limiting Bitcoin's upward momentum.
The market's fragile liquidity structure exacerbates volatility. Recent market analysis indicates that just $643 can cause a 5% fluctuation in the probability of lifting sanctions on Iran, highlighting how susceptible this market is to sudden news. Bitcoin has recently faced repeated resistance near the $80,000 mark, falling back to around $77,800, with the rebound being "weak". If US-Iran negotiations break down or escalate again, risk-off sentiment may quickly spread to the crypto market, pushing down prices of risk assets including Bitcoin. Conversely, if the situation cools, Bitcoin's appeal as a safe haven may be pressured.
Digital currencies' ambiguous positioning between "safe haven" and "risk" attributes means their specific directional influence from the US-Iran situation depends on marginal changes in overall market risk appetite, with volatility in May expected to be significantly higher than other assets.
IV. Comprehensive judgment and key observation variables
Core judgment: The market trading logic in May will likely revolve around the "persistence of the stalemate"—neither a full reconciliation optimism nor a full-scale war panic, but a tug-of-war between the two. In this context, oil prices will run high (Brent $90-95 as the baseline anchor) along with the continuous existence of geopolitical tail risks, forming a baseline scenario for cross-asset allocation.
Key signals to watch closely include:
1. When will Iran's oil storage facilities reach full capacity—when export pipelines are cut off and inventory peaks, Tehran will face a dilemma of either cutting production or yielding; this is the critical point where "standoff" turns into "breakthrough", directly triggering an upward pulse in oil prices.
2. The chain reaction of US inflation data and energy costs—the extent to which rising oil prices amplify along the supply chain will influence the Federal Reserve's policy space and capital market pricing.
3. The actual effectiveness of Iran's foreign minister's shuttle diplomacy—the results of visiting three countries in four days will determine the geometry of the stalemate's duration.
4. Trump's policy signals—whether he shifts from "not in a hurry" to taking proactive measures or announces a temporary victory and steps back.
5. The actual level of intervention from international mediators—whether the mediation efforts from countries like Pakistan and Russia result in new breakthroughs.
Risk warning: The above analysis is based on publicly available information up to April 29, 2026, and geopolitical events are highly unpredictable; the situation may fundamentally change in the short term. This article does not constitute any investment advice; the market is risky, and decisions should be made cautiously.