US stock indexes are putting up a dramatic intraday reversal into the Easter weekend, with the Nasdaq Composite swinging more than 2.2% from session lows after reports emerged that Iran and Oman are drafting a protocol to monitor tanker traffic through the Strait of Hormuz, offering markets a glimmer of hope that the critical oil chokepoint may shift from uncontrolled conflict toward structured oversight.
The Nasdaq Composite, which had been trading sharply lower following President Donald Trump’s national address on the Iran war earlier in the day, suddenly turned higher and threatened to close positive on the session. The index climbed back above 21,800 and touched an intraday high of 21,900, sitting roughly 4% above the prior Friday’s close as U.S. markets looked set to end the week in positive territory heading into extended Easter weekend, with US markets closed Friday, but remaining open on Monday.
The Russell 2000 small-cap index is trading 0.45% higher on the session, suggesting the risk appetite extended beyond mega-cap technology stocks.
What is a Draft Protocol For The Strait of Hormuz?
The catalyst for Thursday’s reversal came from Iran’s state news agency IRNA, which reported that Iranian Deputy Foreign Minister Kazem Gharibabadi stated that tanker and cargo traffic through the Strait of Hormuz “should be supervised and coordinated” by Iran and Oman as the coastal states. The announcement suggests a potential framework for managing vessel passage through the waterway, which normally carries approximately 20% of global oil shipments plus significant liquefied natural gas volumes from Qatar and other Gulf producers.
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The development arrives against the backdrop of the 2026 Strait of Hormuz crisis, which began after U.S.-Israeli strikes on Iran on February 28. Iran’s Revolutionary Guard Corps subsequently issued warnings that effectively closed the strait to vessels traveling to or from U.S, Israeli, or allied ports. Tanker traffic through the chokepoint collapsed by 70-90% from normal levels as war-risk insurance premiums spiked multiple-fold, with more than 150 vessels stranded or forced to reroute around the Cape of Good Hope.
Maritime tracking data has shown that since the conflict began, most ships successfully transiting Hormuz have maintained some connection to Iran through ownership, flag registry, or destination. A very small number of non-Iranian cargoes have passed through with automatic identification systems active, believed in some cases to have negotiated safe passage from Iranian authorities.
What This Means
The proposed Iran-Oman monitoring protocol represents a potential shift from the current state of near-closure toward what markets interpreted as a rules-based framework, even if restrictive. For equity markets, particularly growth and technology stocks sensitive to macro risk premiums, any indication that energy supply disruptions may become more predictable rather than binary carries significant weight.
The Nasdaq’s composition, heavily weighted toward high-duration assets like technology companies, makes the index especially vulnerable to shifts in geopolitical risk premiums and inflation expectations driven by energy price volatility. A sustained closure or functional shutdown of Hormuz would imply persistently elevated energy prices, higher inflation expectations, and pressure on both interest rates and growth stock valuations. On the other hand, even incremental moves toward normalized or at least predictable flows can trigger sharp relief rallies.
Despite the sharp intraday bounce, market breadth remains weak and the Nasdaq’s ability to swing more than 2% intraday reflects both the severity of downside momentum earlier in the session and the intensity of covering once the Hormuz protocol headlines crossed.
The Russell 2000’s modest but positive performance adds a measure of breadth to the rally, suggesting US names are outperforming multi-national peers.
What Next
The Iran-Oman protocol announcement creates a tactical window for bullish positioning, but structural conditions suggest caution for medium-term allocations. The strait remains functionally constrained, with traffic heavily skewed toward Iranian-linked vessels and the shadow fleet. War-risk insurance costs and shipping delays continue at elevated levels, and global energy price uncertainty persists as a headwind for corporate earnings and consumer spending.
Markets are now watching for concrete evidence that the protocol translates into actual increases in non-Iranian tanker traffic through Hormuz. Real-time shipping and automatic identification system data will likely matter more to traders than political statements in validating whether the framework enables meaningful normalization of flows.
The Nasdaq’s ability to end the week positive despite extreme intraday volatility demonstrates markets’ willingness to price in optimistic scenarios when geopolitical headlines shift, but the speed and magnitude of Thursday’s reversal also underscore how quickly sentiment can deteriorate if negotiations falter or military incidents occur. With Easter weekend providing a pause in trading, the coming week will test whether the protocol announcement marks a genuine turning point or merely another false dawn in a conflict that continues to inject significant uncertainty into global markets.
