Stock markets advanced while investors reassessed expectations around energy supply, inflation, and interest rates. Even with the latest decline, oil prices remain significantly above levels seen before the conflict began.
The price of Brent crude futures fell 6% to $97.43 a barrel, reaching its lowest point in two weeks. According to reporting by The Guardian, the move reflected growing market hopes that an agreement could eventually end the nearly three-month US-Israeli war involving Iran.
Still, officials signaled that negotiations remain incomplete. An Iranian government spokesperson said an agreement was “not imminent,” noting that major disagreements remain unresolved, including Iran’s blockade of the Strait of Hormuz.
Markets React to Signs of Easing Tension, but Uncertainty Remains
The prospect of reduced disruption to oil transport triggered a broader market response. Investors moved back into equities while some traditional safe-haven assets also gained.
According to Reuters, Warren Patterson, head of commodities strategy at ING, warned that markets may remain cautious despite the latest developments. He said previous rounds of talks had reached similar stages before ultimately breaking down, making investors reluctant to react too strongly.
Analysts also noted that reopening shipping routes would not immediately restore normal energy flows. Damaged infrastructure in Qatar and other locations could delay recovery for months, even if access through the Strait improves. Barclays maintained its average Brent crude forecast at $100 for the year, while acknowledging the possibility of higher prices.
Shipping activity showed limited movement through the region. Reuters reported that two liquefied natural gas tankers passed through the Strait on Monday en route to Pakistan and China. A supertanker carrying Iraqi crude also departed the Gulf for China after being stranded for nearly three months. UBS analyst Giovanni Staunovo said that physical oil flows remain the key indicator for the market and noted that movement through the Strait continues to face restrictions.
Stocks Rise While Inflation and Rate Expectations Remain in Focus
Financial markets responded beyond the energy sector. Japan’s Nikkei index 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 public holidays.
According to The Guardian, investors have largely looked past concerns about wider economic consequences from the conflict and instead continued focusing on corporate earnings and growth linked to artificial intelligence.
Currency and commodity markets also shifted. The US dollar fell 0.3% against a basket of major currencies, while the British pound gained almost 0.6% to reach $1.3506, its highest level since mid-May. Gold increased by 1.46% to $4,574 an ounce.
Stephen Innes, an independent analyst, said markets appeared to be pricing in the possibility that one of the world’s most important energy routes could return closer to normal operations. He added that recent energy disruptions had strengthened inflation concerns and influenced expectations for tighter monetary policy. Higher oil, gas, and materials costs continue to shape inflation expectations globally, with markets now anticipating two interest rate increases from the Bank of England this year.
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