Markets hold steady as US considers Iran's peace proposal with Hormuz still closed

For the first time in nearly two months, there's a flicker of calm in global markets as diplomats work behind the scenes to end the conflict between the US and Iran. Gold held steady Monday evening, and oil prices paused their rollercoaster run as traders absorbed news that the US is reviewing a proposal from Tehran aimed at de-escalating hostilities. The fighting, which began in late February, has effectively shut down the Strait of Hormuz, a narrow waterway that carries about a fifth of the world's oil.

That blockade has sent energy prices soaring and raised inflation concerns across major economies. With alternative shipping routes longer and more expensive, fuel costs have climbed, hitting consumers and businesses alike. Even a small chance of reopening the strait has been enough to steady markets, but the reality on the water remains grim. Commercial vessels are still avoiding the area, deterred by the risk of attacks and the lack of reliable naval protection.

The latest diplomatic overture appears to involve mutual steps: Iran would allow limited tanker traffic to resume under international monitoring, while the US would ease some sanctions and halt military operations in the region. Officials haven't confirmed details, but sources familiar with the talks say both sides are showing more flexibility than they have in weeks. Still, trust is thin, and past attempts at negotiation have collapsed within days.

Oil prices held onto earlier gains, with global benchmark Brent crude hovering around $132 per barrel. That's down from a peak above $150 but still high enough to strain economies still recovering from earlier inflation waves. Gold, often seen as a safe haven during geopolitical crises, stayed near $2,430 an ounce-flat for the day but well above pre-conflict levels.

Shipping companies continue to reroute vessels around Africa, adding up to two weeks to delivery times and increasing fuel and labor costs. Some insurers have refused to cover voyages near the Persian Gulf altogether. The longer the strait stays closed, the more likely it is that central banks will have to delay interest rate cuts, prolonging the high-cost era for borrowing.

Analysts say the market isn't betting on a quick resolution, but it's reacting to the possibility. "This isn't a breakthrough yet," said one commodities strategist. "But it's the first time in eight weeks that people aren't pricing in a wider war. That's enough to pause the panic."

For now, the world waits. A reopened Hormuz could bring rapid relief to energy markets. But until ships move freely again, the risk of another spike-and another wave of inflation-remains just one flare-up away.