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Oil prices slump as US and Iran pause strikes
🇸🇬 Singapore /Economy & Trade

Oil prices slump as US and Iran pause strikes

From CNA · () English

Summarized and contextualized by DistantNews.

At a glance

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  • Oil prices fell sharply on Monday as the US and Iran paused retaliatory strikes, easing tensions in the Middle East.
  • Brent crude dropped over eight percent to $88.36 per barrel, with analysts suggesting the situation is calmer but not resolved.
  • Stock markets saw mixed performance, with early gains fading as investors worried about tech stocks and awaited corporate earnings and central bank decisions.

Oil prices tumbled Monday as the United States and Iran paused tit-for-tat strikes, offering a respite to Gulf shipping and the oil industry. International benchmark Brent crude fell more than eight percent to $88.36 per barrel. The calming of hostilities eased worries about a resurgence in inflation and further interest rate hikes, initially helping most stock markets climb.

Although the situation in the Middle East has calmed, it has not been resolved, and it could make a decline below US$85 per barrel tricky at this stage.

— Kathleen BrooksKathleen Brooks, research director at XTB trading group, commented on the oil price situation and the unresolved Middle East tensions.

US President Donald Trump's UN envoy stated the US was "giving talks some space." The pause follows an escalation earlier this month where Iran attacked ships in the Strait of Hormuz, breaking a fragile truce and sending crude prices above $100 a barrel last week. Analysts caution that while the situation has calmed, it remains unresolved, potentially making a decline below $85 per barrel tricky.

investors are hoping that this could be a precursor to a resumption in peace talks.

— David MorrisonDavid Morrison at Trade Nation expressed investor sentiment regarding the potential for peace talks.

Equity markets experienced a volatile start to the week. While early gains on Wall Street faltered, the Dow finished in positive territory. The Nasdaq Composite continued to be dragged down by tech stocks, which were further dented by a report of a technological breakthrough by Chinese company Shanghai Yuliangsheng. In Europe, Frankfurt, London, and Paris closed higher.

When a calming of Middle Eastern hostilities fails to provoke a major up day in stocks, you know there is more trouble ahead.

— Chris BeauchampChris Beauchamp, chief market analyst at IG, shared his view on the stock market's reaction to the easing of Middle East hostilities.

Traders are now looking ahead to a week packed with corporate earnings from US giants like Microsoft, Meta, Apple, and Amazon, as well as South Korean and Japanese tech firms. The US Federal Reserve and the Bank of England are also expected to hold interest rates steady this week.

Earlier optimism around a pause in fighting did not last once the US session began, and investors took the earlier gains as a chance to cut back exposure yet further in battered tech stocks.

— Chris BeauchampChris Beauchamp explained the market's shift away from earlier optimism during the US trading session.
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Originally published by CNA. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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