Oil prices rose and global stocks fell as mixed signals on US-Iran talks and the closed Strait of Hormuz kept energy crisis fears alive.
HONG KONG: Oil prices jumped and global equities fell on Thursday as mixed signals from US-Iran talks and the continued closure of a key shipping lane sustained fears of a severe energy crisis.
Markets have been supported since late Monday after former US President Donald Trump backed down from a threat and said the two sides were in peace talks.
Yet uncertainty persists with the Strait of Hormuz virtually closed, a passage for around 20% of the world’s oil and gas.
Washington presented a 15-point plan to end the war, including Iran giving up enriched uranium and reopening the waterway.
Tehran’s state-run TV reported officials had put forward their own five conditions for ending hostilities.
Trump on Wednesday threatened to “unleash hell” if Iran did not strike a deal, but Foreign Minister Abbas Araghchi said his country does not intend to negotiate.
The former US president also claimed Iran was taking part in talks, with denials coming because negotiators feared being killed.
“Pressure on energy prices, shipping flows and broader financial conditions remains one of the few meaningful sources of leverage (Iran) retains,” said Saxo Markets’ Charu Chanana.
She added it would be “imprudent to assume diplomacy is absent simply because it is not visible”.
With investors hoping for a deal, oil prices stabilised this week with Brent above $100 and WTI around $90.
Both contracts rallied on Thursday.
Stocks in Wall Street and Europe rose but Asian markets struggled after a two-day rally.
Tokyo, Hong Kong, Shanghai, Seoul, Sydney, Taipei, Singapore, Manila, Bangkok and Jakarta all fell.
London, Paris and Frankfurt also dropped in early trade.
City Index’s Fiona Cincotta said for any recovery to gain traction, “investors will want to see clearer signs of de-escalation, including the reopening of the Strait of Hormuz”.
Her remarks follow a warning from the head of the International Chamber of Commerce, John Denton.
He said the conflict could cause the “worst industrial crisis” in decades.
The head of the International Energy Agency has warned of a crisis more severe than the 1970s oil shocks, Denton added.
Meanwhile, the World Trade Organization said disruptions to fertiliser supplies pose a double threat to global food security.
A third of the global fertiliser supply normally transits the Strait of Hormuz.
