Hong Kong (AFP) – Oil prices climbed and stocks fell Thursday on fears over the nascent US-Iran ceasefire after Tehran threatened to resume hostilities following Israel’s major bombardment of Lebanon. Equity markets across the globe soared and crude plunged Wednesday after US President Donald Trump announced a two-week halt in the war, and the Islamic Republic said it would reopen the Strait of Hormuz as peace talks took place.
However, with the deal less than a day old, cracks were already appearing as Tel Aviv stated it did not include Israel’s fight against Iran-backed Hezbollah in Lebanon, continuing attacks on its northern neighbor. That perspective was echoed by Vice President JD Vance, who remarked, “If Iran wants to let this negotiation fall apart…over Lebanon, which has nothing to do with them, and which the United States never once said was part of the ceasefire, that’s ultimately their choice.”
Iran argued that this breached the terms of the deal as reports indicated that the vital Hormuz waterway—through which a fifth of the world’s oil and gas passes—had been shut again. However, this came as Tehran announced alternative routes for ships traveling through the Strait, citing the risk of sea mines. The country’s parliament speaker, Mohammad Bagher Ghalibaf, posted on X that the “workable basis on which to negotiate” had already been violated, making further talks “unreasonable.” He listed three alleged US violations of the truce plan: continued attacks in Lebanon, a drone entering Iranian airspace, and a denial of Iran’s right to enrichment.
Hezbollah stated on Thursday that it had fired rockets toward Israel in response to its “violation.” Meanwhile, a senior US official noted that Tehran’s 10-point plan did not align with the conditions the White House had agreed to. Fears that the ceasefire could collapse while crude remains stuck in Hormuz led West Texas Intermediate oil to jump approximately three percent on Thursday, having plunged more than 16 percent the day before. Brent crude was up more than two percent following a 13 percent drop.
Equities also gave up some of their gains, with markets in Tokyo, Hong Kong, Shanghai, Sydney, Singapore, Seoul, and Taipei all down. Attention is now shifting to critical talks in Pakistan expected on Friday or Saturday, with Vance leading the US delegation. “Many questions remain with the 10-point plan that Trump has received from Iran (which includes Iranian control of the Strait of Hormuz, US acceptance of Iran’s uranium enrichment program, the end of all sanctions, and withdrawal of the US military from the Gulf region) is at odds with Trump’s 15-point peace plan,” wrote National Australia Bank’s Skye Masters.
Still, observers warned that an end to the conflict would not see a quick return to normal, with crude prices remaining elevated and key regional infrastructure targeted that could take billions of dollars and months to repair. Shipping journal Lloyd’s List estimated that around 800 ships have been stuck in the Gulf since the end of February when hostilities broke out. Nevertheless, FOREX.com analyst Fawad Razaqzada stated, “Investors are confident that oil prices could ease further and the Strait of Hormuz will reopen again and hopefully stay open beyond the two-week ceasefire period.”
– Key figures at around 0230 GMT –
West Texas Intermediate: UP 3.0 percent at $97.22 a barrel
Brent North Sea Crude: UP 2.5 percent at $97.11 a barrel
Tokyo – Nikkei 225: DOWN 0.6 percent at 55,997.18
Hong Kong – Hang Seng Index: DOWN 0.5 percent at 25,757.20
Shanghai – Composite: DOWN 0.6 percent at 3,972.21
Euro/dollar: DOWN at $1.1660 from $1.1667 on Wednesday
Pound/dollar: DOWN at $1.3390 from $1.3405
Dollar/yen: UP at 158.85 yen from 158.35 yen
Euro/pound: DOWN at 87.08 pence from 87.22 pence
© 2024 AFP
