Oil Tumbles as US-Iran Deal Nears: Can Indonesia Breathe Easy?

US stocks closed higher last Friday after government bond yields fell. This allowed Wall Street to record a positive week despite high market volatility. The Dow Jones Industrial Average rose 294.04 points, or 0.58%, to 50,579.70. The 30-stock index briefly hit an intraday record and closed at a new all-time high. Meanwhile, the S&P 500 gained 0.37% to 7,473.47 and the Nasdaq Composite rose 0.19% to 26,343.97. Although all three major indices closed in positive territory, gains were pared back from early-session highs. ‘This is an everything market. The current market seems more concerned about missing out on Middle East peace opportunities than the risk of holding positions over the weekend,’ said Steve Sosnick, Chief Strategist at Interactive Brokers, to CNBC International. It remains unclear whether the US and Iran are moving closer to a deal to end the conflict. Oil prices closed slightly higher on Friday but remained below early-week peaks as investors hoped for a swift resolution to the Iran conflict. Brent crude rose 0.9% to $103.54 per barrel, while West Texas Intermediate (WTI) gained around 0.3% to $96.60 per barrel. US 10-year government bond yields fell nearly 3 basis points to around 4.56%, while 30-year yields dropped over 4 basis points to approximately 5.06%. Earlier in the week, bond market volatility had weighed on stocks. The 30-year yield hit a 2007 high before reversing, while the 10-year yield reached its highest level in over a year. Investors fear a prolonged US-Iran conflict would keep oil prices elevated and fuel inflation. Meanwhile, Qualcomm shares surged nearly 12% on Friday, marking a third consecutive daily gain. The semiconductor company’s stock rose 18.2% for the week. Overall, the S&P 500 rose 0.9% last week, logging its eighth consecutive weekly gain—the longest rally since late 2023. The Dow Jones climbed 2.1%, marking its third positive week in four, while the Nasdaq added 0.5% and notched its seventh weekly gain in eight weeks. This week’s trading will be shortened due to the Idul Adha holiday on Wednesday and Thursday (27-28 May 2026). With a shortened trading week, investors must monitor key market sentiment drivers. Foreign sentiment will remain focused on the Iran conflict entering its fourth month. Domestically, government policies and economic data will be key sentiment drivers. 1. Conflict Developments The Iran conflict will enter its fourth month this week. The US and Iran have shown progress in peace talks to end the war and reopen the Strait of Hormuz. However, the two nations remain at odds over Iran’s uranium stockpile and plans to impose shipping fees on the strategic waterway. US Secretary of State Marco Rubio stated there are ‘positive signs’ towards a deal but reiterated the US opposes any fee system in the Strait. President Donald Trump also insisted the passage must remain open and free for international shipping. The Strait of Hormuz, through which around 20% of global oil and LNG supplies pass, has seen near-halted shipping since the conflict began on 28 February. Negotiations are also hindered by enriched uranium issues. The US demands Iran surrender its uranium stockpile due to fears it could be used for nuclear weapons, while Iran insists its nuclear program is peaceful. Trump has urged his negotiators not to rush a deal and confirmed the US blockade on Iranian ports will remain until a formal agreement is signed. He faces criticism from Republican figures such as Mike Pompeo and Ted Cruz, who view the potential deal as too favourable to Iran. 2. Impact of Government Data and Policies Last week, the government announced a major policy: the creation of a strategic commodities export body. Market participants are expected to focus on this policy’s implications this week, especially as many subsidiary regulations remain pending. The new policy has drawn significant market attention due to concerns over its potential impact on corporate performance. The government has decided to fully transfer Indonesia’s strategic commodity exports to the state-owned export entity, PT Danantara Sumberdaya Indonesia (PT DSI), effective 1 January 2027, delaying the original deadline of 1 September 2026. The government will implement the export mechanism through the special body starting next month, with a transition period until 31 December 2026. During this period, companies may still sell directly to buyers, but all export documentation must go through the state-owned enterprise (BUMN). After the transition ends, the government will conduct an evaluation before full implementation from January 2027. The move aims to strengthen export oversight, curb under-invoicing, transfer pricing, and prevent foreign currency outflows. Last week, Bank Indonesia released key data on Indonesia’s Balance of Payments (BOP) and Current Account. The Q1 2026 BOP recorded a $9.1 billion deficit. This figure is notably concerning as it not only highlights significant external sector pressure but also marks the deepest deficit since