Standard Risk Global

The Oman-brokered “Muscat Protocol”—signed over the weekend by Iran and Oman establishing a guaranteed Green Channel for commercial maritime traffic through the Strait of Hormuz—triggered the broadest risk-on move since October 2024. The S&P 500 surged 3.4% on the week to close at 6,611.83, the Nasdaq rallied 4.1% in a tech-led recovery, and the VIX collapsed 18.2% to 24.54, unwinding the panic premium that had pushed the index above 30 in mid-March when a total Hormuz blockade appeared imminent.

The Protocol establishes a joint Iran-Oman coordination center to oversee vessel traffic through the strait, which handles approximately 21 million barrels per day—roughly 20% of global petroleum liquids consumption. Brent crude front-month settled near $111.25 per barrel, up 3% on the week as the spot market reflects ongoing supply tightness, but the December 2026 contract fell 7% to $78, signaling that markets now price a normalisation of flows by year-end. The US 10-year yield declined 13 basis points to 4.31% as the geopolitical risk premium unwound.

Approximately 40% of China’s crude oil imports transit the Strait of Hormuz. The Protocol materially reduces the tail risk of a supply disruption that had forced Chinese refiners to pay record premiums on spot cargoes and accelerated strategic petroleum reserve drawdowns in Q1. For Chinese firms expanding globally, the implications are threefold: (1) energy input cost visibility improves, supporting capital expenditure planning across Belt & Road infrastructure projects; (2) the narrowing Brent backwardation creates a hedging window for corporate treasury teams to lock in forward crude at $78–$82; and (3) reduced geopolitical risk premium supports RMB stability—USD/CNH held steady at 6.8848, its tightest range in three months.

Key triggers over the next 72 hours: FOMC minutes release on April 8 will clarify whether the Fed views the energy-driven inflation impulse as transitory, and US Q4 GDP data on April 9 will test the soft-landing narrative. Base case (65% probability): Hormuz de-escalation holds, Brent normalises toward $95–$100 by Q3, and the Fed delivers one 25bp cut in H2. Risk scenario (25%): Protocol implementation falters amid Iranian hardliner pushback, re-igniting the $120+ crude spike and forcing PBoC to intervene on RMB. Actionable implication: Corporate risk teams should use this volatility window to extend energy hedges into 2027 while forward curves remain in steep backwardation.