Brent crude falls below $90: US plans to send diplomats back to the Middle East, Palestinian side mediates with sanctions relief proposal

Multiple signals of diplomatic easing have emerged, putting significant pressure on the crude oil market. Brent crude fell below $90 per barrel on Tuesday, with a decline of over 3%, while WTI crude simultaneously dropped to around $82.50, hitting a one-week low. According to Xinhua News Agency, Pakistan’s Inter-Services Public Relations (ISPR) issued a statement on the 25th, stating that Pakistan's Army Chief Munir and Interior Minister Naqvi concluded a one-day visit to Iran. **The two sides focused their comprehensive discussions on preventing further escalation, reopening the Strait of Hormuz, and accelerating measures to end the conflict.** Xinhua, citing Iran’s Tasnim News Agency on the 25th, reported that a source close to Iran’s negotiating team said **Iran hopes Pakistan will clearly convey its position and negotiation conditions regarding the Strait of Hormuz to the US.** The source stated that during the meeting between Iranian officials and Pakistan's Army Chief Munir on the 24th, Iran had clearly set out its position. **Iran’s conditions include the US honoring the Islamabad Memorandum of Understanding (MOU) and fulfilling its provisions, with Article 5 specifically relating to management arrangements for the Strait of Hormuz.** Meanwhile, **the US State Department is reportedly preparing to redeploy diplomatic personnel who were evacuated due to previous US-Iran conflict back to several embassies in the Middle East, with arrangements possibly starting as soon as this week.** The US adjustment of diplomatic staffing is seen by the market as a sign of diminished expectations of further escalation in the region, indicating that the US is reserving room for the resumption of diplomatic channels and long-term pressure. Signals such as Pakistan’s mediation and US diplomatic personnel adjustment are being released in quick succession, jointly lowering market expectations of a full-scale military conflict between the US and Iran. The geopolitical premium accumulated earlier due to the risk surrounding the Strait of Hormuz has also been quickly digested. Embassy Repopulation: Washington Sends Cooling Signals According to reports citing internal US State Department documents, the US is preparing to redeploy previously evacuated diplomatic personnel due to US-Iran tensions back to embassies in the Middle East, with arrangements possibly commencing as early as this week. **The embassies planned for a higher staffing level cover eight countries: Israel, Lebanon, Saudi Arabia, Qatar, Jordan, Oman, Iraq, and Kuwait. Most of these embassies are currently still closed or operating with minimal staff.** The US State Department stated, "We continue to assess the security situation of global diplomatic missions. Based on the latest evaluations, we are adjusting staff allocations at some embassies in the Middle East to ensure the advancement of US foreign policy objectives while safeguarding personnel safety." The market views this move as evidence that Washington's strategic focus is shifting from military confrontation to long-term economic pressure. Pakistan-Iran High-Level Meeting Focused on Easing Tension In this round of diplomatic easing, Pakistan played a crucial intermediary role. According to reports, **the core content of the US framework conveyed to Iran by Munir is: if Iran reopens the Strait of Hormuz and ceases all hostile actions against Gulf states, the US will lift relevant sanctions according to the MOU.** Pakistan’s Interior Minister Naqvi later posted on social media, stating he and Munir had a "positive and fruitful meeting" with Iranian President Pezeshkian. The sides mainly discussed the US-Iran conflict, the future of tensions in the Middle East, and measures needed to implement the MOU. **"The talks made significant progress and ended in a positive atmosphere."** According to ISPR, both parties held comprehensive discussions around preventing further escalation, reopening the Strait of Hormuz, and accelerating measures to end the conflict. Iran appreciated Pakistan’s constructive role in promoting dialogue and easing tension. Geopolitical Premium Digested Rapidly, Divergence Remains on Oil Price Trend The concentrated release of diplomatic easing signals is rapidly digesting the previously accumulated oil risk premium caused by geopolitical risks. Brent crude fell below $90 on Tuesday, down over 3%, after rising more than 6.6% last week. WTI crude fell to around $82.50, with a cumulative two-day decline of about 5.4%. Oil price declines have simultaneously boosted the global bond market. US 10-year Treasury yields fell to around 4.64%, with German and UK bond yields also slightly following downward. The subsequent trend will depend on the diplomatic process. If the Strait of Hormuz remains stable and negotiations progress, the geopolitical premium in oil prices may further narrow. Risk Disclosure and Disclaimer The market entails risks; investment requires caution. This article does not constitute personal investment advice, nor does it take into account individual users' specific investment objectives, financial conditions, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular situation. Investment decisions based on this are entirely at the user's own risk.