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Brent settled at $105.33 on Friday after gaining roughly 16% for the week. Gold slipped below $4,720. The dollar held at 98.5. And then Trump cancelled the entire diplomatic mission to Islamabad an hour after Iran’s foreign minister left the building.
The second round of US-Iran peace talks didn’t just fail. It never happened. Iranian Foreign Minister Abbas Araghchi flew to Islamabad on Friday, met Pakistani PM Shehbaz Sharif and army chief Field Marshal Asim Munir, conveyed what Iran’s Foreign Ministry called “observations,” and left. No meeting with American negotiators. No formal proposal exchange. Just a visit to the mediator and a flight to Muscat for the next stop on what Araghchi called a “timely tour” of Islamabad, Oman, and Moscow, per NPR and Bloomberg reporting.
The White House had confirmed hours earlier that special envoy Steve Witkoff and Jared Kushner would fly to Pakistan on Saturday for direct talks. Then Trump pulled the plug. His explanation on Truth Social, per CNBC: the flight was too long, the work too much, and Iran’s leadership too fractured to negotiate with. “Nobody knows who is in charge, including them,” he wrote. “We have all the cards, they have none! If they want to talk, all they have to do is call.”
Within ten minutes of the cancellation, per Trump’s own statement to reporters, Iran submitted a revised proposal. Trump said it was “much better” than the previous one but “not enough.” So we are now in a situation where the United States won’t fly to the table, Iran won’t sit at it, and both sides are exchanging proposals through Pakistani intermediaries while the Strait of Hormuz stays shut and Brent traces the same volatile pattern it’s been carving since the first ceasefire collapsed in March.
The $25 Nobody Is Talking About
The headline price is not the story this week. The structure is. The US Energy Information Administration published an analysis on Friday showing that the Dated Brent spot price climbed to a premium of more than $25 per barrel over the front-month Brent futures contract in early April. That’s not normal backwardation. Normal backwardation is a dollar or two. A $25 spread between spot and futures is the physical market screaming that there are not enough barrels available today to meet immediate demand.
The EIA’s explanation is direct: buyers are scrambling to secure physical volumes to replace obstructed shipments that would normally come through Hormuz, and that urgency is showing up in spot prices far more aggressively than in futures contracts priced for later delivery. On April 7, per EBC Financial Group’s analysis of ICE data, Dated Brent hit a record $144.42 per barrel while front-month futures traded near $109.27. That’s a $35 gap. The physical market and the paper market are looking at the same war and reaching completely different conclusions about how long it lasts.
This matters for positioning because the futures strip is where most retail and institutional exposure sits. June Brent at $109.11, July at $99.25, December at $79.92, per ICE data cited by EBC. The curve is pricing oil back below $80 by year-end. The spot market hit $144 on April 7 and even at current levels the premium over futures remains historically extreme. If you’re trading the futures, you’re betting on a resolution. If you’re buying physical barrels, you’ve already given up on one.
What the EIA Actually Forecasts
The EIA’s April Short-Term Energy Outlook, published earlier this month, expects Brent to peak at $115 per barrel in Q2 2026 before easing as production shut-ins slowly abate. Their base case assumes conflict doesn’t persist past April and that Hormuz traffic gradually resumes but doesn’t return to pre-conflict levels until late 2026. Under that scenario, Brent averages $76 in 2027.
That assumption looked reasonable two weeks ago. It looks less reasonable today. The first round of talks in Islamabad ran 21 hours across three rounds, per CBS News reporting, with Vice President Vance leading a 300-member US delegation against Iran’s 70-member team led by parliamentary speaker Ghalibaf. They got nowhere. Araghchi claimed afterward they were “inches away from an MoU” and accused Washington of moving the goalposts. Now there isn’t even a second round scheduled. Trump says phone calls will suffice. Araghchi is heading to Moscow.
The EIA also flagged that estimated production shut-ins reached 7.5 million barrels per day in March, rising to 9.1 million in April, per the STEO report. The Brent-WTI spread widened to $12 per barrel in March because Brent is more exposed to the seaborne disruption while US domestic inventories remain above average, cushioned by SPR releases and a Jones Act waiver announced in March.
Gold’s Losing Week
Gold closed the week at approximately $4,718 per ounce, per Kitco, posting a decline of over 2% for the week and marking its first weekly loss after five consecutive gains. The paradox from our analysis earlier this week still holds: gold should be rallying on geopolitical risk, but it can’t outrun the dollar. The DXY gained roughly 0.7% for the week, per Trading Economics, as rate-cut expectations continued to evaporate.
UBS analyst Giovanni Staunovo framed it cleanly in Friday commentary: rising oil prices coupled with expectations of higher interest rates, a stronger dollar, and rising bond yields are putting sustained pressure on non-yielding bullion. The 10-year Treasury yield rose 1.6% this week, making gold less attractive relative to bonds. RJO Futures analyst Daniel Pavilonis noted in Friday commentary that the gold market is now “heavily dependent on news,” swinging on every headline from Islamabad. That’s not a market with conviction. That’s a market waiting for someone to tell it what to do.
Silver closed Friday’s session at $75.86, up marginally on the day but down roughly 4% for the week. Platinum edged up to $2,019.53. Palladium surged 2.1% to $1,499.41, likely on automotive supply chain hedging as Asian refiners face higher input costs from the oil shock spreading through industrial supply chains.
Where This Leaves Your Book
Commonwealth Bank of Australia published what is probably the cleanest strategic note on the Hormuz standoff on Friday, per Investing.com. Their base case: the US backs down first. Gasoline prices are biting into consumer spending. The University of Michigan consumer sentiment survey hit a 50-year low of 49.8. The Fed is locked by the inflation overlay. Midterm calculations are starting to dominate every Washington decision. CBA believes these forces will pressure Washington toward a deal before Tehran moves.
But their tail risk is the one that matters for commodity exposure: a major military escalation that pushes oil significantly higher. Trump ordering the Navy to shoot mine-laying vessels, a sanctioned Iranian tanker attempting to leave the strait, Israel ordering IDF to vigorously attack Hezbollah targets in Lebanon despite the extended ceasefire. These are not de-escalation signals.
The futures curve says $80 by December. The spot market hit $144 three weeks ago and the premium is still extreme. The EIA says $115 peak in Q2. Trump says phone calls. Araghchi is flying to Moscow. And the $25 backwardation is telling you that the physical market has already made its bet on which of these is right.
It isn’t betting on the phone calls.
