THIS AFTERNOON: US, Iran leave talks without an agreement

Good afternoon, readers. We went into the weekend discussing Iran’s closure of the Strait of Hormuz, and somehow, just a couple of days later, it’s now the US threatening to blockade the strait. US President Donald Trump said the US would prevent “any and all ships” from entering or leaving the waterway, though it’s unclear how far it might go and whether it will get help from other countries.

This came as negotiations between the US and Iran collapsed over the weekend. After 21 hours in Islamabad, negotiators from the two countries walked away without an agreement, each blaming the other for holding the line on core demands.

US Vice President JD Vance said Iran refused to accept what he described as Washington’s “final and best offer,” centered on an explicit commitment not to pursue nuclear weapons, Reuters reports. Iranian officials described the US’ demands as “unreasonable,” TRT World reports, citing Iranian state media.

The problem: The two sides are negotiating entirely different endgames. Iran is pushing for a broad settlement, covering sanctions relief, regional scrutiny, and sovereignty issues like the Strait of Hormuz, while the US is pursuing a narrower arrangement, focusing on Iran’s nuclear program — a major point of contention in the latest round of talks — along with the Strait of Hormuz and regional de-escalation.

Yes, but: No one’s calling time on diplomacy just yet. Iran’s Foreign Ministry Spokesperson Esmaeil Baqaei said no one expected an agreement in a single session and that the road to diplomacy wasn’t shut off.

The strait did see some movement though: Three supertankers carrying crude passed through the Strait of Hormuz on Saturday, the first to exit the Gulf since the ceasefire, while three empty tankers were sailing into the waterway on Sunday, Reuters reports, citing shipping data. However, hundreds are still stuck waiting for clearance, and some were abruptly making U-turns mid-journey, Bloomberg reports.

Market reax: Indian benchmarks tumbled this morning, tracking a broader retreat in Asian equities as Brent crude jumped 7.3% to USD 102 / bbl. The Nifty 50 slid 1.78%, while the Sensex shed 1.83% in early morning trade. The reversal comes after both indices posted their strongest weekly gains in five years last week — climbing 6% — on the back of a fragile ceasefire. The INR also declined 0.7% to 93.3 per USD.

Watch this space

INDUSTRY WATCH — The two-week US-Iran ceasefire has lifted sentiment across India’s industrial sector, but top industry leaders believe the relief may be fleeting as disruptions linked to the Strait of Hormuz continue to affect costs and supplies, Economic Times reports.

Sentiment rebounds cautiously: The truce offers a window for recovery and could support demand, Tata Consumer Products CEO Sunil D’Souza told the daily. This sentiment was echoed by Parle Products’ Arup Chauhan, one of India’s largest biscuit producers, who told the daily: “The ceasefire is definitely a breather and consumer sentiment should look up.”

Supply chains may take years to fully recover, with prices of raw inputs hiked by 10-15% amid damaged gas infrastructure in the Middle East, warned Shekhar Bajaj of consumer electricals giant Bajaj Electricals. Stabilization could take 1-2 months but is contingent on sustained peace, said Sunil Kataria, MD at agribusiness firm Godrej Agrove.

Why it matters: Price hikes across consumer goods are unlikely to be rolled back soon, industry executives say. For India, heavily exposed and reliant on Gulf energy imports, the ceasefire signals temporary respite, while for the MENA region, restoring stable flows is critical to sustaining demand.

AVIATION — Dubai narrows the runway: Dubai has limited foreign airlines to one daily flight per carrier through 31 May, Reuters reports, citing a private email sent to airlines by Dubai Airports.

The move is causing panic among carriers in India, DXB’s largest source market with 11.9 mn passengers last year. The Federation of Indian Airlines told the newswire the curbs create an uneven playing field, as they do not apply to UAE carriers like Emirates and Flydubai, and could lead to “substantial” revenue losses. IndiGo added the restrictions have “significantly constrained” operations, leaving parts of its fleet underutilized.

Why it matters: This move will further strain operations of Indian airlines which are facing mounting revenue losses and higher input costs which canceled over 10k flights to the MENA region during the US-Israel-Iran war. India’s airports regulator has already slashed landing and parking charges by 25% to shield the carriers from further losses.

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Data point

20.82 mn tonnes — that’s the amount of liquefied petroleum gas (LPG) India is expected to import in this fiscal year, reflecting the country’s continued reliance on external supply to meet a majority of its domestic requirement, Hindu Businessline reports.

India’s LPG sourcing is concentrated in the Gulf, with most cargoes from Saudi Arabia, the UAE, and Oman transiting the Strait of Hormuz, exposing supply to disruption risks along a key energy corridor.

The big story abroad

For once, the international business press is focusing on something other than the war: Hungary’s elections. The European country just voted out Prime Minister Viktor Orbán, who’s been in office for 16 years, opting instead for center-right rival Peter Magyar. Orbán’s critics accuse him of being authoritarian — his opposition to the EU’s efforts to help Ukraine fight Russia, as well as the economic decline Hungary has seen in recent years, have contributed to his falling out of favor.

ALSO- Look out for earnings season to start this week, with Goldman Sachs set to report its earnings today. Expect an interesting week, given the double whammy of earnings against the backdrop of the war.

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