US and Iran Edge Toward Ceasefire Extension as Hormuz Diplomacy Stalls

Washington and Tehran gave an in-principle agreement Wednesday to extend their ceasefire for a further two weeks, buying diplomats more time to navigate the core disputes that have so far prevented a full resolution to the 47-day US-Iran war. The truce, set to expire on April 22, was agreed on April 8 under Pakistani mediation but has been fragile from the outset, with both sides accusing each other of violations.

Trump told reporters the conflict is 'very close to over' and signalled that talks could resume in Pakistan 'within days'. A US official quoted by Reuters cautioned, however, that Washington has not formally agreed to an extension — a gap in messaging that underlines how tenuous the diplomatic progress remains. Iran is conditioning any deeper engagement on a halt to Israeli operations against Hezbollah in Lebanon, a demand that both Washington and Jerusalem have rejected.

Hormuz: Still the Defining Variable

The Strait of Hormuz — through which roughly 20% of global oil supply normally flows — remains effectively closed. Goldman Sachs estimates flows running at approximately 2.1 million barrels per day, or around 10% of normal levels, on a four-day moving average. That supply shock is the primary driver of the current energy crisis and continues to suppress GCC export revenues even as Brent crude holds near $95 per barrel.

Saudi Arabia's air traffic, a proxy for economic activity, is running at 80–90% of pre-crisis levels — far more resilient than the UAE at roughly 40% or Qatar at 25%. The divergence reflects Saudi Arabia's greater geographic distance from active conflict zones and its stronger capacity for logistics re-routing. But no GCC economy is insulated from the sustained disruption to regional trade and energy infrastructure.

For GCC markets opening Thursday morning, the key signal is whether the ceasefire extension is formally confirmed before trading begins. Any explicit US acknowledgment of a truce extension would likely provide a short-term relief rally across TASI and the UAE bourses, which have shed more than 10% from their pre-war highs.