Markets Rise As Crude Retreats
Oil prices fell below 100 dollars a barrel on Monday while stock markets rose, as investors grew more hopeful that the United States and Iran are moving closer to a peace deal.
Brent crude futures, the global oil benchmark, dropped 6% to 97.43 dollars a barrel, their lowest level in two weeks. The decline reflected expectations that an agreement could eventually end the nearly three-month U.S.-Israeli war on Iran.
Key Disputes Remain Unresolved
Despite the improved mood, a deal is not yet assured. Although a framework has been negotiated, Washington and Tehran remain divided over major issues, including Iran’s blockade of the Strait of Hormuz.
An Iranian government spokesperson warned that an agreement was “not imminent”. The strait’s effective closure has been one of the biggest drivers of the energy shock that followed the first U.S. and Israeli missile strikes on Tehran on 28 February.
Analysts Urge Caution
Warren Patterson, head of commodities strategy at ING, warned that markets have seen similar optimism before, only for negotiations to collapse.
He said investors are likely to be cautious about overreacting until there is clearer evidence that a deal can be signed and that oil flows through the Strait of Hormuz can return to more normal levels.
Oil Flows Still Restricted
Even if the strait reopens, analysts warn that normal oil flows may take months to resume. Damaged energy infrastructure in Qatar and elsewhere will still need to be repaired, limiting how quickly supply can recover.
Barclays maintained its average Brent crude forecast of 100 dollars a barrel for this year, while warning that risks remain tilted to the upside if disruptions continue or repairs take longer than expected.
Tankers Begin Moving Again
Shipping data cited by Reuters showed that two liquefied natural gas tankers were leaving the strait on Monday, heading toward Pakistan and China.
A supertanker carrying Iraqi crude also left the Gulf for China on Saturday after being stranded for almost three months. UBS analyst Giovanni Staunovo said physical oil flows remain the key factor to watch, and that flows through the strait are still restricted.
Stocks Gain Across Global Markets
Japan’s Nikkei rose nearly 3%, while the pan-European Stoxx 600 gained 1%. Several major markets, including the United States and the United Kingdom, were closed for a public holiday.
Equities have largely looked past the broader economic risks of the war, focusing instead on the artificial intelligence boom and strong corporate profits. Lower oil prices also helped reduce fears that energy costs would continue feeding inflation.
Dollar Slips As Gold Climbs
The dollar fell 0.3% against a basket of major currencies. The pound rose nearly 0.6% to 1.3506 dollars, its highest level since mid-May.
Gold climbed 1.46% to 4,574 dollars an ounce. Stephen Innes, an independent analyst, said markets were responding to the possibility that one of the world’s most important energy choke points could soon begin returning to something closer to normal.
Inflation And Rates Remain Central
Inflation concerns remain elevated because higher oil, gas and fertiliser prices are expected to push up broader costs, including food prices, in the coming months.
Before the Iran war, investors had expected central banks to cut interest rates. That view has since shifted sharply toward expectations of rate increases. Markets now expect the Bank of England to raise rates twice this year, showing how deeply the energy shock has changed the monetary policy outlook.
