Brent Crude Falls Below $99 on Hopes of US-Iran Agreement

A Decline in Oil Prices Alters the Inflation Equation

Oil prices are indeed experiencing a rollercoaster ride. The hope for a resumption of negotiations between Washington and Tehran to end the conflict that began on February 28, 2026, has abruptly pushed Brent crude back below the $100 mark. The United States and Pakistan, acting as a mediator, have publicly expressed their hope, while Iran has indicated it is reviewing a new American proposal.

Sources cited by Reuters mention the preparation of a one-page memorandum, which would postpone nuclear-related issues. This decline follows the previous day's drop, already discussed in our article on Donald Trump's U-turn on the Strait of Hormuz.

For the eurozone, where the inflation forecast for 2026 was revised to 2.6% by the ECB in March (compared to the 1.9% anticipated in December 2025), specifically due to the energy shock linked to the war, a lasting easing of oil prices would alter the expected price trajectory and could relieve pressure on the Frankfurt institution.

Wall Street Hits Record Highs as T-Note Eases

The movement in oil has resulted in a significant reallocation towards American stocks. During the session on May 6, the Dow Jones gained 1.04%, the Nasdaq 2%, and the S&P 500 1.46%, according to figures reported by AFP. The S&P 500 and the Nasdaq reached new historical highs on May 5 and 6, 2026.

In the bond market, the yield on the 10-year US T-Note fell to 4.36% on May 6, down from 4.42% the day before. This six basis point decrease reflects a moderation in inflation expectations driven by the prospect of a sustainably lower oil price.

The signal sent is consistent: the simultaneous drop in oil and long-term rates highlights that the markets are currently factoring in a scenario of de-escalation rather than just a technical hiccup. The compression of sovereign yields also acts as a mechanical support for equity valuations.

A Fragile Momentum, Hinged on Diplomacy

Enthusiasm remains contained, however. Donald Trump's threats to bomb Iran in the absence of a deal partially tempered the upward trend without erasing it.

For the Paris session on May 7, two key points require attention. Firstly, any change in tone in the USA-Iran negotiations could quickly reverse energy prices, with oil remaining the pivot of the ongoing macroeconomic scenario.

Secondly, the trajectory of the T-Note yield and European rates will dictate the short-term trade-off between stocks and bonds. The upcoming Eurostat inflation report for the eurozone, expected on May 20, and Nvidia's results on the same day, will provide two additional insights to gauge the strength of the current momentum.