The Tamesis
Oil prices fell below $100 a barrel on Monday, with most Asian markets rising on hopes a peace deal was imminent, but Iran later warned that while some progress had been made, a solution was not yet complete.
Futures contracts for international benchmarks Brent and West Texas Intermediate were both down more than 5% in midday trading in Europe as weekend headlines showed progress in talks to end wars in the Middle East and reopen the Strait of Hormuz.
U.S. Secretary of State Marco Rubio speculated during a visit to New Delhi on Monday that a deal could be reached today, but a spokesman for Tehran’s foreign ministry later said: “No one can make such a claim.”
Also read: Severe heatwave drives record power consumption, India relies on coal
Rubio’s comments came after U.S. President Donald Trump said talks were proceeding in an “orderly and constructive manner” while warning U.S. negotiators “not to rush into a deal.”
However, many investors are betting that Trump is eager to announce a deal that would allow tanker traffic to resume in the Gulf and help ease fuel prices ahead of the summer travel season.
Chris Weston, head of research at Pepperstone, said: “According to reports from Donald Trump, a memorandum of understanding has been ‘roughly negotiated’ and details will be announced at some stage soon.”
Asian markets rise after Xi Jinping meets Sharif
This prospect pushed Asian stock markets higher across the board, with Tokyo stocks rising 2.9%, surpassing 65,000 points for the first time.
Major stock markets in Hong Kong and South Korea were closed for public holidays, but the Shanghai Composite Index rose nearly 1% and the BSE Sensex in Mumbai rose 1.42%.
In Europe, buying was strong in Paris and Frankfurt, but trading was thin during the Whit Monday holiday in several countries across the continent, while the London Stock Exchange was closed for the spring bank holiday.
Wall Street was also closed Monday for Memorial Day.
Meanwhile, Chinese President Xi Jinping met with Pakistani Prime Minister Shehbaz Sharif in Beijing on Monday, state media reported, while diplomatic efforts by several countries to formally end Iran’s war continued to drag on.
The high-level meeting came after Sharif held talks with China’s No. 2 leader Li Qiang earlier in the day, state news agency Xinhua reported.
Pakistan has emerged as a central mediator between the United States and Iran, holding face-to-face talks last month but failing to reach a lasting deal.
Sharif was accompanied on the trip by Army Chief Asim Munir, a key negotiator between the United States and Iran in Islamabad, Pakistani television broadcast on Monday.
Xi praised Pakistan for “taking the initiative to play a mediating role in restoring peace in the Middle East,” according to China’s readout of the talks between the two leaders.
China has played a quieter mediating role, hosting phone calls and meetings with officials from affected Gulf states.
According to Pakistan’s state-run PTV channel, Sharif and Munir told the Chinese leader that “the world is going through a critical moment.”
“Pakistan has played a sincere role in mediating between the United States and Iran,” he said, adding, “Things are moving in the right direction. I would like to thank China for its support in promoting peace.”
‘Service charge’
U.S. and Iranian forces have been adhering to a ceasefire since April 8 while diplomats push for a negotiated solution, even as Iran maintains control of Gulf shipping through the Strait of Hormuz and the U.S. Navy attempts to block Iran’s ports.
Earlier, U.S. Secretary of State Rubio told reporters during a visit to New Delhi: “We thought we might get some news last night or today,” referring to hopes of a deal.
“I think what we’re putting on the table is pretty solid stuff in terms of their ability to open the Strait,” he said. “We’re either going to have a good deal or we’re going to have to deal with it another way. We’d rather have a good deal.”
But in Tehran, Foreign Ministry spokesman Esmaeil Baqaei poured cold water on hopes of a speedy final solution.
“We can say that we have reached conclusions on most of the issues that are being discussed,” he told a weekly news conference.
“But to say that this means a deal is about to be signed – no one can make that assertion.”
Baqai stressed that Iran will continue to manage maritime traffic through the Strait of Hormuz by charging service fees, arguing that this does not amount to Tehran “seeking to collect tolls.”
“The services provided – navigation services and the measures required to protect the environment in the Strait of Hormuz, the Persian Gulf and the Sea of Oman – are subject to a fee,” he said.
Earlier, President Donald Trump said he had told negotiators “not to rush into a deal, the time is on our side” and warned that the US naval blockade would remain in place until a deal was reached.
“If I make a deal with Iran, it will be a good and proper deal,” a post on Trump’s Truth Society read, adding: “It’s not even fully negotiated.”
new fed chair
Later this week, investors will also be closely watching how the Federal Reserve and its new chairman, Kevin Warsh, react to key consumer inflation data and its potential impact on interest rates.
Many economists warn that continued price rises caused by the U.S. and Israeli war on Iran will limit the possibility of the Federal Reserve cutting interest rates to boost U.S. economic growth – something Trump has repeatedly called for in recent months.
“The inflation story remains at the heart of the system,” Stephen Innes of SPI Asset Management said, according to AFP.
“Following several stronger-than-expected reports on consumer and producer inflation earlier this month, there are growing concerns that higher oil prices and supply disruptions related to conflicts in the Middle East are starting to trickle into the broader inflation pipeline,” he said.
In Europe, rising inflation is widely expected to lead the European Central Bank to raise interest rates in coming weeks, raising borrowing costs while economic growth remains weak.
But high corporate earnings and enthusiasm for artificial intelligence-driven technology encouraged investors to ignore inflation risks, with U.S. stock indexes hitting record highs.
Key data around 1100 GMT
North Sea Brent crude oil: fell 5.6% to $94.61 a barrel.
West Texas Intermediate crude oil: fell 5.7% to $90.94 a barrel.
TOKYO – Nikkei 225: up 2.9% to 65,158.19 (close).
Shanghai – Composite Index: rose 1.0% to 4152.57 (closed).
Hong Kong – Hang Seng Index: Closed for holidays.
LONDON – FTSE 100: Closed for holidays.
Paris – CAC 40: up 1.6% to 8,244.84.
FRANKFURT – DAX 30: up 1.5% to 25,256.11.
USD/JPY: fell from 159.13 yen to 158.94.
NEW YORK – DOW: Closed for holidays.
- AFP With additional input and editing by Jim Pollard
See also:
Samsung shares rise on UnionPay deal, but legal test looms
AMD will invest more than US$10 billion in Taiwan to improve AI chip packaging
China consumer spending and factory output fall in April
Xi Jinping warns Taiwan could cause ‘conflict’ as Trump summit begins
India commits to 60% clean energy capacity in new climate pledge
Coal power use in China and India falls for first time in half a century
Energy crisis triggered by Iran war fuels renewable energy boom, IEA says
Asia ‘worst hit by energy crisis’ due to Iran war
India’s demand for wood, coal poor as gas prices soar due to Iran war
India races to secure supplies as new attacks threaten ‘energy war’
Electric car sales surge in Asia as Iran war raises fuel costs
