Talks to end the war in Iran may begin this week, suggesting a near-term exit from the conflict and a fall in oil prices and the dollar.

The Common Sense understands that Iranian negotiators have set a series of demands for the negotiations, including the cessation of military strikes, the ability to maintain aspects of their weapons programmes, and an agreement to toll the Strait of Hormuz. This would mirror Egypt’s control of the Suez Canal, allowing Iran immense new global leverage and revenues, leaving Tehran arguably stronger than before the war.

The United States (US) has submitted its own terms, including that Iran fully open the Strait of Hormuz and dismantle its uranium enrichment capacity where such capacity exceeds the demands of a civilian nuclear programme. These terms essentially mirror the demands the US had put to Iran before the conflict.

Pakistan is set to play a key role in facilitating these talks and will likely take the lead in chairing the discussions.

However, the potential for peace has sparked concern among Gulf states and Israel. Both parties fear that an agreement may come too early, with Iran’s offensive capabilities not sufficiently degraded. Moreover, there are concerns that allowing Iran to toll Hormuz would see the Islamic Republic emerge from the war as an even more formidable regional actor.

In its analysis of the ongoing conflict, The Common Sense published a detailed set of six scenarios outlining possible near-term exits from the war.

Five of these scenarios predicted near-term conclusions to the war that would see a retreat in oil prices and a weakening of the US dollar. Only scenario six, which described the prospects for an extended ground war, saw oil prices spike deep into 2026 and even beyond.

It now appears that two of those scenarios are beginning to take shape: Scenario two, which envisioned a US retreat and exit from the conflict, and scenario four, where Iran negotiates to open the Strait of Hormuz.

The prospects of talks bode well for the oil price outlook and hence the broader outlook for the global economy through the balance of 2026, including the prospect that anticipated rate cuts occur both in the US and in South Africa. These cuts, which had been broadly expected, have started to be pencilled out by economists who feared the knock-on effects of high oil prices being sustained into 2026.