Oil prices surged on Monday after renewed tensions in the Middle East escalated the Iran–US standoff, following reports that Iran briefly closed the Strait of Hormuz over the weekend before reopening it a day later, blaming a US blockade of its ports.
Despite the flare-up, global equities were supported by lingering optimism that a deal could still emerge to end the seven-week crisis, even as Tehran signalled it was not currently planning to attend fresh peace talks.
Markets had swung sharply on Friday, when crude prices plunged and US and European equities rallied after Iran said it would reopen the strategic waterway, through which around a fifth of global oil and liquefied natural gas flows, citing a ceasefire between Israel and Lebanon.
US President Donald Trump told AFP that “we’re very close to having a deal”, insisting there were “no sticking points at all” left in negotiations with Tehran. Iran, however, quickly rejected the claim, maintaining that its stockpile of enriched uranium would not be transferred “anywhere”.
US benchmark West Texas Intermediate had fallen more than 11 per cent and Brent nearly nine per cent on Friday, but both rebounded sharply on Monday as tensions resurfaced.
The latest spike followed reports of an incident involving an American destroyer firing on and seizing an Iranian vessel accused of attempting to evade inspection. Tehran warned it would retaliate, while describing the US blockade of Iranian ports as a key obstacle to diplomacy.
State broadcaster IRIB cited Iranian sources as saying there were “currently no plans to participate in the next round of Iran–US talks” in Pakistan. Separately, Fars and Tasnim news agencies reported that the “overall atmosphere cannot be assessed as very positive”, adding that lifting the blockade remained a precondition for negotiations.
WTI rose more than 7 per cent at one point on Monday, while Brent climbed over 6 per cent.
Diplomatic engagement has so far been limited to a single 21-hour session in Islamabad on April 11, which ended without agreement, although behind-the-scenes efforts have continued.
On Sunday, Trump reiterated his position on social media, saying, “We’re offering a very fair and reasonable DEAL, and I hope they take it,” while warning of possible action against Iran’s infrastructure if no agreement is reached.
Iran’s Revolutionary Guards responded with a warning that any unauthorised passage through the Strait of Hormuz would be treated as hostile cooperation, adding that offending vessels “will be targeted”.
Foreign ministry spokesman Esmaeil Baqaei described the US blockade as “a violation” of the ceasefire.
Despite the geopolitical tensions, equity markets continued to advance, with Wall Street’s S&P 500 and Nasdaq closing at record highs. Asian markets also gained, led by Tokyo, Seoul, and Taipei, as technology stocks extended a recent rally.
The dollar, which had weakened on Friday, regained ground against major currencies.
Analyst Chris Weston of Pepperstone said traders were weighing “whether the ceasefire can be salvaged through this week’s diplomatic talks, with recalibration on the probability of military escalation”.
He added that Trump’s comments over the weekend were seen by some as “a pure hawkish negotiating tactic ahead of this week’s diplomatic talks”, noting that markets should expect continued volatility given the fragility of negotiations.
“Without a comprehensive agreement on Iran’s nuclear programme, the ceasefire remained fragile,” Weston said.
– Key Figures Around 0230 GMT
West Texas Intermediate: UP 5.3 per cent at $88.31 a barrel
Brent North Sea Crude: UP 4.8 per cent at $94.67 a barrel
Tokyo – Nikkei 225: UP 1.0 per cent at 59,045.45 (break)
Hong Kong – Hang Seng Index: UP 0.5 per cent at 26,281.92
Shanghai – Composite: UP 0.6 per cent at 4,073.76
Euro/dollar: DOWN at $1.1757 from $1.1776 on Friday
Pound/dollar: DOWN at $1.3500 from $1.3530
Dollar/yen: UP at 158.89 yen from 158.49 yen
Euro/pound: UP at 87.09 pence from 87.02 pence
New York – Dow Jones: UP 1.8 per cent at 49,447.43 (close)
London – FTSE 100: UP 0.7 per cent at 10,667.63 (close)
AFP
