Relief rally ahead of reality

The CEO of one of the world’s largest independent financial advisory organizations has warned that the market’s relief rally based on a two-week US-Iran ceasefire is understandable but misplaced.

warning from devere group Global markets were boosted by Nigel Green’s announcement that US President Donald Trump has agreed to a conditional two-week pause in military action with Iran, which is directly linked to the reopening of the Strait of Hormuz.

Brent crude has fallen nearly 15% in the past few days to below $95 a barrel, reversing a war-inspired rally, while European equities have rallied aggressively. The Stoxx Europe 600 has climbed 3.8%, Germany’s DAX is up 4.4%, and the FTSE 100 has gained 2.5% as investors increasingly reduce geopolitical risk positions.

Nigel Green says: “A 15% drop in oil in less than a week and a nearly 4% rise in European equities tells you what the markets are doing. They are clearly pricing in easing tensions. But this assumption seems very optimistic.”

The ceasefire remains conditional and time-limited, with both sides linking compliance to actions on the ground. Iran has said it will allow safe passage through the Strait of Hormuz, a route that carries about 20% of global oil flows, for two weeks, while the US has halted attacks during the same period.

Nigel Green says: “This is a 14-day window, no permanent policy change. You have a fifth of the world’s oil supply passing through a corridor that is still effectively under the influence of one of the parties to the conflict. This is not sustainability.”

Further complicating the picture, missile and drone activity from Gulf states is still being reported despite the ceasefire and Israel’s military operations in Lebanon continue, highlighting that the broader regional conflict is active beyond the US-Iran framework.

Nigel Green says: “Missiles are still being launched into the Gulf, Israel is still engaged on another front, and yet markets are behaving as if the region is back to normal.

“There is a clear gap between price action and reality.”

There are also increasing signs that Iran is selectively controlling the route through Hormuz, with some ships reportedly facing conditions or additional costs associated with transit, thereby strengthening its influence on global energy supply chains even during the ceasefire period.

“Even if only a portion of tankers face delays, restrictions or additional costs, this directly contributes to global pricing. You don’t need a complete blockade to get oil markets up and running again,” explains Deavere’s CEO.

At the same time, President Donald Trump has signaled a willingness to engage with Iran on removing nuclear material and has initiated discussions about possible sanctions relief, which markets are interpreting as a path to a broader agreement.

Nigel Green says: “Sanctions relief and nuclear talks are being discussed alongside a temporary ceasefire. It is a complex and delicate mix.”

“None of this is locked in, yet markets are already trading as if it is.”

The scale of the equity rally shows how strongly investors were positioned for growth.

As tensions have temporarily eased, capital has increasingly flowed back into risk assets, particularly in Europe, which is highly sensitive to energy price movements.

Nigel Green says: “The rise of almost 4% in the Stoxx 600 and more than 4% in the DAX in such a short period shows how aggressively investors are repositioning their positions.

“But a reset based on a two-week ceasefire carries obvious risks.”

The energy market remains an important transmission channel. Any disruption in flows through the Strait of Hormuz, renewed attacks on infrastructure, or breakdown of the ceasefire could rapidly reverse the decline in oil prices and rekindle inflation concerns globally.

“Oil looks comfortable below $95, but this is on top of unresolved risks. A single rise point in the trough could send prices sharply higher again in a matter of days.

“The current rally is driven by relief, not solutions. The rally is running ahead of reality.”

The structural drivers of instability throughout the Middle East remain in place, and the timeline for any lasting agreement remains uncertain.

Markets are celebrating the pause in hostilities, but the underlying conditions that caused oil to rise and equities to fall have not been addressed. They have simply been postponed.

“Investors should take this rally with caution. The gains from the relief may be limited, but the downside from the renewed surge remains significant and immediate,” warned the CEO of Deavere Group.