Iran Responds to the US Peace Draft: Oil Prices Drop Nearly 2%, a Turning Point in the War Emerges

Axios reported on May 1 that Iran has responded to the revised version of a peace agreement draft presented to the U.S. through a Pakistan-mediated channel, and market expectations of a turn in the situation in the Middle East have intensified. Under the impact of this news, New York crude oil futures fell nearly 2% in a single day to $103.27, while Brent crude also slipped slightly to around $110.23. The event took place on the day of the expiration date (May 1) of the 60-day deadline stipulated by the War Powers Resolution, echoing the Trump administration’s position that it had claimed “the war has ended.”

5/1 Major progress: Pakistan mediates and Iran responds to the U.S. revised draft

The core of the information revealed by Axios is that the Iranian government has issued an official response to the U.S. side’s revised peace agreement draft, with the channel conveying that Pakistan—long serving as an informal bridge for communication between Iran and the U.S.—played a role as a substantive mediator this time. Axios did not publish the specific contents of the response, but the market views “Iran has responded” itself as a major signal of progress—meaning both sides are still at the negotiating table and have not moved toward more intense confrontation.

This incident occurred on the same day as the 60-day War Powers Resolution deadline expired. The day before (4/30), the Trump administration had already claimed that the war had been “terminated” and no further congressional authorization was needed. This stance prompted questions from Democrats and some Republican lawmakers, but if the May 1 Iranian response is interpreted as “the ceasefire continues, and there is still diplomatic dialogue between both sides,” it would provide some factual backing for Trump’s “war ended” narrative.

Oil market reaction: New York crude down nearly 2%, Brent retreats to 110

After the news broke, the oil market reacted quickly: prices for May futures on the New York Mercantile Exchange fell nearly 2% to $103.27; May Brent crude futures edged down 0.2% to $110.23. This marks the first time in the past two months that the oil market has made a clear response to “war de-escalation” signals, after being highly sensitive to “war escalation” signals. Compared with late April, when Brent had once broken above the $114 high, this pullback indicates that the market has started factoring in the possibility that the situation in the Middle East may gradually cool.

However, market participants remain cautious. The real risk premium has not been fully eliminated—conditions of Iran’s Revolutionary Guard’s control in the Strait of Hormuz, the supply-structure shock from UAE’s exit from OPEC on 5/1, and rising costs for tanker insurance are structural pressures that would be difficult to recover from quickly even if the war de-escalates in the short term. Brent still holds above $110, far higher than the $75-$80 range seen before the war broke out in February.

What to watch next: the content of the peace agreement, Iran’s parliamentary approval threshold, and Trump’s stance

There are three key points to watch next: first, whether the specific content of Iran’s response includes concessions on issues such as its nuclear weapons program, military deployments in the Strait of Hormuz, and support for regional proxy organizations (such as Hezbollah in Lebanon and the Yemen Houthi); second, if the draft is reached, Iran’s parliament (Majlis) typically sets very high approval thresholds for matters involving nuclear weapons or security sovereignty, meaning the final approval timeline could be delayed by several months; third, whether Trump himself will reinforce or revise his stance on “the war has ended” in subsequent tweets or press conferences—this will directly affect how the market prices the credibility of progress on peace talks.

For crypto and macro investors, the linkage worth tracking in this oil price pullback signal is: oil prices fall → inflation expectations are revised down → the likelihood of a Fed rate cut in June rises → BTC and other risk assets may benefit in the short term. But the prerequisite for this logic is that the Middle East situation continues to cool; if Iran’s subsequent response is interpreted as a hardline stance and the peace process breaks down, then this oil price decline would only be a temporary correction.

This article Iran responds to the U.S. peace draft: oil prices fall nearly 2%, and a turning point for the war emerges was first published on Lian News ABMedia.