Pakistan sees progress in US-Iran talks: is a peace deal possible?
The eight-month conflict between the United States and Iran may receive new diplomatic impetus. Pakistan, which is mediating between the parties, said it was cautiously optimistic about the prospects for negotiations.At the same time, the latest diplomatic contacts took place not only with the participation of Islamabad: Saudi Arabia and Türkiye joined the process.
In October, the head of the Pakistani army, Field Marshal Asim Munir, visited Tehran twice. During his last visit on October 26, he was accompanied by Saudi Defense Minister Khalid bin Salman and Turkish intelligence chief Ibrahim Kalin.The delegation held talks with senior Iranian representatives.
On October 30, Pakistani military spokesman Ahmed Sharif Chaudhry said Munir's repeated visits showed positive signs. However, he stressed that Islamabad remains cautious: influential forces interested in continuing the conflict may prevent the achievement of agreements.
The main question now is not only whether the United States and Iran will be able to return to the negotiating table, but also whether regional powers will be able to create a mechanism that will keep the conflict from further escalating.
Why does Pakistan's statement matter?
Pakistan occupies a special position in the current diplomatic configuration.
The country maintains close relations with Saudi Arabia, has its own channels of interaction with Iran, and at the same time is trying to facilitate negotiations with Washington.
This allows Islamabad to act as a mediator between states whose interests in the region do not always coincide.
The Pakistani military's statement is especially noteworthy given Asim Munir's two visits to Tehran in one month. The latest trip brought together representatives of the three states that had previously signed a joint defense agreement.
However, it is important here to separate diplomatic activity and the real results of negotiations.
As of now, Pakistan has not announced an agreement between Washington and Tehran. Also, the specific terms of the proposals discussed have not been disclosed, nor has it been confirmed that the United States has officially supported the latest contacts in Tehran.
Therefore, Islamabad's cautious optimism for now should be viewed as a political signal, and not as evidence that the war is nearing its end.
Saudi Arabia and Türkiye become part of the diplomatic process
Regional diplomacy extends beyond the US-Iran bilateral relationship.
One of the most interesting elements of recent events has been the participation of Saudi Arabia and Turkey.
On October 26, Saudi Arabian Defense Minister Khalid bin Salman and Turkish intelligence chief Ibrahim Kalin were in Tehran with Asim Munir.
The delegation met with Iranian President Masoud Pezeshkian and representatives of the Iranian National Security Council.
This is especially important given that Saudi Arabia and Iran have long been on opposite sides of the regional confrontation.
For Riyadh, further escalation poses additional security risks, especially amid renewed Houthi attacks and threats to infrastructure and transport routes.
Türkiye, in turn, is interested in preventing a large-scale regional war that could affect trade, energy security and political stability in the Middle East.
According to reports from the meeting, the four states agreed to continue consultations on regional security issues.
Thus, the diplomatic process is gradually acquiring a broader regional character. Its participants are trying not only to reduce tensions between the United States and Iran, but also to develop mechanisms to prevent further expansion of the conflict.
Mecca Defense Pact: Could Iran Join Former Regional Rivals?
Another important signal came in the statement of the Pakistani military representative regarding the joint defense agreement between Pakistan, Saudi Arabia and Turkey.
The agreement, signed on August 7, 2026, provides for the principle of collective defense: an attack on one participant is considered an attack on all.
On October 30, Ahmed Sharif Chaudhry said that the wording of the document does not exclude the accession of new states. In particular, he admitted the possibility of Iranian participation.
However, he emphasized that the final decision will depend on the political leadership of the three original parties to the agreement.
This statement deserves special attention.
Iran, which is currently in a state of armed conflict with the United States and is involved in a complex system of regional confrontations, could potentially become part of a structure created by Pakistan, Saudi Arabia and Turkey.
However, for now we are talking exclusively about the possibility of expanding the agreement, and not about real negotiations on Iran’s accession.
The very fact of public discussion of this option shows how much the regional diplomatic agenda has changed.
Until recently, relations between Tehran and Riyadh were characterized by deep mistrust.Both sides are now engaged in consultations aimed at reducing tensions.
Why is the peace agreement still in doubt?
Despite the positive signals, diplomatic efforts face serious obstacles.
A Pakistani military spokesman separately warned of the existence of influential opponents to the settlement. He called them “powerful spoilers and detractors,” that is, forces that consider the continuation of the conflict to be beneficial for themselves.
Specific members of this group were not named.
This creates additional uncertainty: even if Washington and Tehran are able to find common ground, the implementation of the agreements will require the coordination of the interests of many regional and international players.
There are other unresolved issues.
First, uncertainty remains regarding the terms of the cessation of hostilities and future security guarantees.
Secondly, disagreements remain over the American blockade and shipping in the Strait of Hormuz.
Third, regional tensions are not limited directly to US-Iran relations. There are other parties involved in the conflict, including forces operating in Yemen.
Therefore, even reaching an initial agreement between Washington and Tehran will not necessarily lead to immediate stabilization of the entire region.
How can diplomatic negotiations affect global markets?
For financial markets, the development of negotiations matters primarily through the energy sector and the geopolitical risk premium.
The main intersection of the conflict and the global economy is the Strait of Hormuz.
This is one of the most important routes for global oil trade. Any restrictions on shipping or threats to transport infrastructure can increase the cost of supply, increase insurance costs and create additional uncertainty for the energy market.
This is why diplomatic signals from Islamabad and Tehran have implications far beyond the region.
Oil
A sustained reduction in tensions has the potential to reduce the geopolitical premium in oil prices.
If market participants begin to assess the likelihood of a return to normal shipping as higher, the pressure on quotes from supply disruption risks may ease.
However, diplomatic statements alone do not guarantee price reductions. To do this, the market will need more concrete evidence of de-escalation.
US dollar
Geopolitical crises can increase demand for defensive assets, including the dollar.
If the likelihood of further escalation declines, some of the defensive demand could potentially weaken.
But the dynamics of DXY also depend on the policies of the Federal Reserve, interest rates and the state of the US economy. Therefore, it would be wrong to link any dollar movement solely with the US-Iran negotiations.
Gold
Gold has traditionally been viewed by investors as a hedge against geopolitical and macroeconomic uncertainty.
Convincing progress in negotiations can reduce one of the factors supporting protective demand.
At the same time, gold reacts not only to geopolitics, but also to real interest rates, dollar dynamics and expectations regarding central bank policies.
Stock markets
Reducing geopolitical risks can improve investor attitudes toward risky assets.
This is especially true for companies sensitive to energy costs, international trade and transportation costs.
However, a sustainable stock market recovery will require not only diplomatic signals, but also confirmation that the regional situation is indeed stabilizing.
What to track now?
To assess the further development of the situation, investors should pay attention to several key factors.
1. Strait of Hormuz. Any changes in shipping conditions could significantly affect expectations for global oil supplies.
2. Diplomatic contacts between the USA and Iran. Not only the statements of the mediators are important, but also the confirmed negotiations directly between the parties.
3. Actions of Saudi Arabia and Turkey.Their participation can become an important factor in the formation of a regional security system.
4. Brent and WTI. The reaction of oil prices will help assess how strongly the market is revising the geopolitical risk premium.
5. DXY and gold. The dynamics of protective assets will allow us to assess changes in demand for instruments traditionally used in periods of uncertainty.
6. The situation in Yemen.Further escalation around the Houthis could complicate the diplomatic process and create additional threats to regional transport routes.
Three possible scenarios for the development of the situation
Based on current diplomatic signals, three main scenarios can be identified. These are analytical options for the development of events, and not forecasts with a stated probability.
Scenario 1: Gradual de-escalation
Pakistan, Saudi Arabia and Turkey manage to maintain the negotiation process. Washington and Tehran are finding an opportunity to return to diplomatic agreements.
In this case, the geopolitical premium in energy prices may gradually decline, and the demand for defensive assets may weaken.
Scenario 2: Continued diplomacy without a final agreement
Negotiations continue, but the parties cannot agree on key issues.
This means continued heightened uncertainty for the energy market and periodic fluctuations in investor sentiment depending on news.
Scenario 3: Resumption of escalation
Diplomatic efforts face serious obstacles, and opponents of the settlement have the opportunity to derail the process.
In this case, risks to oil supplies and regional security could increase again, increasing the likelihood of a rising geopolitical premium on energy prices.
The main conclusion: there is a diplomatic signal, but peace is still far away
Recent developments indicate that Pakistan is trying to form a broader regional diplomatic platform to resolve the conflict between the US and Iran.
Asim Munir's two visits to Tehran in October, the participation of representatives from Saudi Arabia and Turkey, and a public announcement about the possibility of expanding the defense agreement indicate increased diplomatic activity.
But there remains a significant distance between cautious optimism and a real peace agreement.
There are no confirmed agreements to end the conflict, and key differences between the parties remain.
For global markets, this means that geopolitical factors continue to be an important source of uncertainty. You should especially carefully monitor oil prices, the situation in the Strait of Hormuz and the dynamics of protective assets.
