By JBizNews Desk
May 11, 2026
Global financial markets opened the new week cautiously Monday as signs that U.S.-Iran peace negotiations had stalled pushed stock futures lower, lifted the dollar, and sent oil prices climbing again — a pattern that has become increasingly familiar to investors navigating nearly three months of geopolitical volatility tied to the war in the Persian Gulf.
The shift in sentiment followed a blunt statement from President Donald Trump, who announced Sunday that he had rejected Iran’s latest counterproposal aimed at ending the conflict and reopening the Strait of Hormuz.
“I have just read the response from Iran’s so-called ‘Representatives.’ I don’t like it — TOTALLY UNACCEPTABLE!” Trump wrote on Truth Social.
The post quickly erased much of the optimism that had fueled last week’s powerful market rally.
The S&P 500 and Nasdaq Composite had both posted their sixth consecutive weekly gains amid growing investor expectations that negotiations between Washington and Tehran were approaching a breakthrough.
By Sunday evening in Asia, however, markets were moving back into defensive positioning.
Futures tied to the Dow Jones Industrial Average fell roughly 143 points, or 0.3%, while futures linked to the S&P 500 and Nasdaq 100 also declined approximately 0.3%.
The U.S. dollar strengthened against a basket of major currencies as traders shifted toward traditional safe-haven assets, while both Brent crude and West Texas Intermediate oil prices moved higher on concerns that the disruption to Gulf energy flows may continue far longer than markets had recently hoped.
Iran’s latest proposal had reportedly been delivered through mediators in Pakistan and called for lifting U.S. Treasury sanctions on Iranian oil exports within 30 days alongside an end to Washington’s naval blockade of Iranian ports.
The Trump administration has consistently resisted those demands absent a broader nuclear and security agreement.
Secretary of State Marco Rubio reinforced the administration’s position Sunday, rejecting Tehran’s suggestion that Iran would reopen the Strait of Hormuz while maintaining effective operational control over the passage.
“That’s not opening the straits,” Rubio said. “Those are international waterways.”
Despite the broader diplomatic setback, markets did receive one modest operational sign that selective shipping movement through the region remains possible.
A QatarEnergy liquefied natural gas carrier, the Al Kharaitiyat, successfully crossed the Strait of Hormuz Sunday for the first time since the conflict began on February 28.
The vessel headed toward Pakistan’s Port Qasim after reportedly receiving transit approval from Iran as part of a limited confidence-building arrangement involving Qatar and Pakistan, both of which continue playing central mediation roles in the negotiations.
The transit offered a narrow but important signal that portions of Gulf shipping traffic may still be selectively allowed even while the broader waterway remains effectively closed to most commercial energy exports.
Elsewhere across the Gulf region, however, fresh security incidents underscored how fragile the situation remains.
The United Arab Emirates reported intercepting two drones launched from Iran, while Qatar condemned a drone strike targeting a cargo vessel operating in its territorial waters.
Kuwait additionally stated that its air-defense systems engaged hostile drones that briefly entered Kuwaiti airspace.
The incidents reinforced growing concerns among investors that tactical military escalations could rapidly destabilize already fragile diplomatic efforts.
For financial markets, the week ahead now carries heightened importance.
Investors are preparing for a series of critical economic reports expected to offer the clearest indication yet of how the Iran-driven oil shock is affecting the broader U.S. economy.
The Bureau of Labor Statistics is scheduled to release both the Consumer Price Index and Producer Price Index this week — key inflation readings arriving as the national average gasoline price remains above approximately $4.54 per gallon.
Wall Street increasingly fears that sustained energy inflation could begin feeding more aggressively into transportation, manufacturing, food, and consumer prices across the economy.
Analysts at Goldman Sachs recently raised their Brent crude forecast to $90 per barrel by late 2026, citing accelerating global inventory drawdowns estimated at roughly 11 million to 12 million barrels per day as the Hormuz disruption persists.
The bank warned that even a future diplomatic breakthrough may not immediately solve the underlying supply imbalance.
“Even if flows via Hormuz eventually resume, the lag in restoring supply, combined with depleted inventories, suggests sustained tightness,” said Billy Leung, investment strategist at Global X ETFs. “I’d argue the fat tail is still ahead of us, not behind.”
The ongoing energy shock is also placing the Federal Reserve in an increasingly difficult position.
The central bank held interest rates steady at its most recent meeting, but policymakers now face competing risks pulling in opposite directions.
Higher oil prices are pushing inflation expectations upward at the same time consumer confidence and discretionary spending continue weakening.
Additional rate hikes risk tipping the economy toward recession.
Rate cuts, meanwhile, risk allowing inflation expectations to become further entrenched after one-year consumer inflation expectations recently climbed to approximately 4.5%, according to the University of Michigan’s latest survey.
Corporate earnings this week will also receive heightened scrutiny.
Results from Cisco Systems and Under Armour are expected to offer additional insight into whether rising energy costs and geopolitical instability are beginning to pressure corporate supply chains, logistics expenses, and consumer demand.
But for global markets, the dominant variable remains the same one investors have watched for nearly ten weeks:
What happens next between Washington and Tehran — and whether diplomacy can reopen the narrow shipping corridor between Iran and Oman through which roughly one-fifth of the world’s oil supply once flowed freely.
— JBizNews Desk
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