Switzerland Talks Collapse, 80 Million Barrels Queue at Hormuz, and Economists Warn the Inflation Damage Is Already Done

Since the U.S. and Iran signed their memorandum of understanding Thursday, the immediate focus has shifted from whether the deal happened to whether it holds. Early signals on Friday are mixed.

The Swiss Cancellation

Switzerland's foreign ministry confirmed that follow-up technical talks scheduled for Bürgenstock on Friday would not proceed as planned. The White House confirmed Vice President JD Vance was no longer traveling to Switzerland, citing unresolved logistical issues. A White House spokesperson told reporters: "The plans for the upcoming technical talks have not been finalized, and the U.S. delegation has been prepared to depart at the first available opportunity. But the logistics of these negotiations have never been simple or predictable."

David Roche, a strategist at Quantum Strategy, told CNBC it is "a really bad deal" though he added it would likely hold anyway. UBS said in a research note that the agreement "marks really the beginning rather than the end of the process to try to end the war and address Iran's nuclear capabilities." Adel Abdel Ghafar, a senior fellow at the Australian Strategic Policy Institute, told CNBC there are still several unresolved friction points, including Israel's campaign in Lebanon, and warned that without resolution "there is a scenario we potentially may go back to a conflict."

What's Actually Moving Through the Strait

On the water, the deal is producing results. According to global trade intelligence firm Kpler, three Saudi supertankers carrying 6 million barrels of oil crossed the Strait of Hormuz as of Thursday. Vance told reporters Thursday that tankers carrying more than 12 million barrels crossed the strait overnight and that "the Iranians, for the second night in a row, did not shoot at any ships."

According to maritime intelligence firm Windward, 10 vessels that had been stranded for all 110 days of the conflict began moving as of Thursday morning. The U.S. Navy ended its blockade of Iranian ports and coastal waters, with U.S. Central Command confirming all enforcement operations related to the blockade have ceased.

OilPrice.com reports approximately 80 million barrels of crude are now queued up to exit the strait, a significant backlog that illustrates how far physical flows remain from pre-war normal.

Oil Prices: Down Sharply, But Volatile

Brent crude futures for August were indicated around $79.59 per barrel Friday morning, down roughly 0.3%, while WTI futures for July showed a 2.3% gain to $78.15. Both contracts are on track for a weekly loss of approximately 8%, according to CNBC. Brent is now down roughly 36% from its conflict-era peak above $120 a barrel reached in March, per Tiago Lacerda, a market analyst at Axi.

Goldman Sachs cut its oil price forecast earlier this week, projecting Brent to average $80 in late 2026 and $75 in 2027, citing faster-than-expected recovery in Persian Gulf crude flows. Tamas Varga, analyst at PVM Oil Associates, said Friday the conditional Hormuz reopening has convinced investors that the price disruption "is well and truly over," while adding that the recent sell-off "may prove unsustainable in the short term." He sees near-term Brent trading between $75 and $82.

The Strongest Counterargument: Don't Celebrate Yet

Skeptics of the optimistic market reaction have a legitimate case. Jakob Larsen, chief safety and security officer at BIMCO, the world's largest international shipping organization, said Thursday that the industry still views the Strait as a safety risk. Its central section is "mined and un-navigable," Larsen wrote, meaning ships are currently using narrower channels closer to the Iranian or Omani coast. The memorandum did not specify which routes are safe, how opposing-direction traffic will be managed, or whether militaries will assist. President Trump also told reporters Wednesday that "we will bomb them" if Iran does not permanently shut down its nuclear program, a statement that shipping operators cannot ignore when deciding whether to risk billion-dollar vessels and crews.

This concern reflects an operational reality that will determine whether the 80-million-barrel backlog moves smoothly or turns into a new crisis.

The Inflation That Won't Un-Bake

Even a smooth reopening faces an unavoidable economic lag. Simon MacAdam, deputy chief global economist at Capital Economics, said higher inflation is already locked in across most economies. Natural gas prices piped to households typically lag the upstream market by around three months, MacAdam noted. Fertilizer prices could jump as much as 38% this year as Gulf supply disruptions ripple through agricultural markets, according to the World Bank, which last week cut its global growth forecast to 2.5%, the slowest since the pandemic, and expects global inflation to reach 4% this year, up from 3.3% in 2025.

Jason Miller, a professor of supply chain management at Michigan State University's Eli Broad College of Business, told Wired that U.S. gas prices have jumped more than 35% nationally since late February and that consumers "shouldn't count on a rapid recovery." "This is an incredibly fragile situation," Miller said. "None of these things would have happened if you had not had the war."

Europe faces particular exposure. MacAdam expects European and Japanese inflation to rise by an additional 3 to 4 percentage points as U.S. liquefied natural gas export prices move higher. The European Central Bank last week became the first major central bank to raise interest rates in nearly three years.

India Stays Cautious

OilPrice.com separately reports that India, one of the world's largest oil importers, is not rushing back to Middle Eastern supply despite the Hormuz reopening. After nearly four months of disruption, Indian refiners have diversified their sourcing, and the return to Gulf crude will be measured rather than immediate. That delay in demand normalization is itself a factor keeping prices from rebounding sharply.

The next concrete test of the deal's durability is whether the technical talks that were canceled Friday can be rescheduled and whether Iran's Supreme Leader Ayatollah Ali Khamenei's stated condition that the agreement protect the "resistance front" can be reconciled with U.S. terms that Vance described as providing Iran "not a cent" without full compliance. Those two positions have not yet been tested against each other at the negotiating table.