Oil Prices Surge Near $100 a Barrel Amid Waning Confidence in US-Iran Ceasefire Agreement
Global Markets Tumble Amid Uncertainty Over Iran Ceasefire Deal
Oil prices soared higher on Thursday, reversing an earlier plunge, as doubts over the durability of a fragile ceasefire deal between the US and Iran intensified. The sharp increase in oil prices led to a decline in global stock markets, with the S&P 500 and Nasdaq futures each sliding 0.4 per cent before the opening bell, and Dow Jones Industrial Average futures dipping 0.5 per cent.
The decline in stock markets came on the heels of a 2.5 per cent to 3 per cent gain in all three indices the previous day, following US President Donald Trump's announcement of a two-week ceasefire with Iran late Tuesday. However, the fragile ceasefire deal was dealt a blow just hours after the announcement, as a round of intense Israeli strikes on Lebanon killed and injured hundreds. In response, Iran again closed the Strait of Hormuz, a chokepoint for energy transport where a fifth of the world's oil typically passes.
This move sent oil prices climbing back toward USD 100 a barrel, reversing an earlier plunge on optimism over the temporary ceasefire agreement. Benchmark US crude was 5.4 per cent higher on Thursday at USD 99.44 a barrel, while Brent crude, the international standard, rose 4.1 per cent to USD 98.70 a barrel.
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| Index | Previous Day's Gain | Thursday's Decline |
|---|---|---|
| S&P 500 | 2.5% | 0.4% |
| Nasdaq | 3% | 0.4% |
| Dow Jones Industrial Average | 2.7% | 0.5% |
Uncertainties over global energy supply remained, with the Strait of Hormuz largely closed despite repeated demands from the US for it to be reopened. Talks to pursue a permanent end to the war could start in Pakistan on Saturday, with Vice President JD Vance expected to lead the US delegation. Trump posted on his Truth Social media platform that the US military will remain in the region "until such time as the REAL AGREEMENT reached is fully complied with".
The decline in global markets was not limited to the US, with other major indices also experiencing losses. At midday in Europe, Britain's FTSE 100 fell 0.3 per cent, France's CAC 40 dropped 0.9 per cent, and Germany's DAX lost 1.3 per cent. Asian shares closed mostly lower, with Tokyo's Nikkei 225 dropping 0.7 per cent to 55,895.32, and South Korea's Kospi losing 1.6 per cent to 5,778.01.
| Index | Thursday's Decline |
|---|---|
| Tokyo's Nikkei 225 | 0.7% |
| South Korea's Kospi | 1.6% |
| Hong Kong's Hang Seng | 0.5% |
| Shanghai Composite index | 0.7% |
| Australia's S&P/ASX 200 | 0.2% |
| Taiwan's Taiex | 0.3% |
| India's Sensex | 1.6% |
Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline
The US dollar rose to 158.98 Japanese yen from 158.57 yen, while the euro was trading at USD 1.1681, up from USD 1.1663.
Investor Takeaway
Oil prices may continue to fluctuate due to geopolitical tensions.
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