Hong Kong (AFP) – Oil prices rose Wednesday as talks to end the Iran war appeared to be at a standstill and the crucial Strait of Hormuz no nearer being reopened. While the White House has said Donald Trump and his team were considering Tehran’s latest proposal to restore traffic through the waterway, CNN and the Wall Street Journal said the president was sceptical.
The Islamic republic this week submitted a plan that would reportedly see it ease the chokehold and Washington lift its retaliatory blockade on the country’s ports as talks continued, including over its nuclear programme. While US Secretary of State Marco Rubio said Iran’s proposal was “better than what we thought they were going to submit,” he insisted any eventual deal had to be “one that definitively prevents them from sprinting towards a nuclear weapon.”
Iranian defence ministry spokesman Reza Talaei-Nik said Washington “must abandon its illegal and irrational demands,” adding the United States was “no longer in a position to dictate its policy to independent nations.” Qatar warned of the possibility of a “frozen conflict” if a definitive resolution is not found. Concerns about the stalled peace push have pushed crude prices higher for more than a week, with Trump’s decision to cancel his envoys’ trip for peace talks in Pakistan last weekend adding to the downbeat mood.
Brent is above the level it hit before the two sides announced a ceasefire at the start of April, while West Texas Intermediate broke $100 Tuesday for the first time in two weeks. Both contracts continued to rise Wednesday, with Brent holding above $113 and WTI above $101. “Iran wants the blockade lifted and access to its flows restored,” wrote Stephen Innes at SPI Asset Management. “Washington holds that lever and is in no hurry to give it away without extracting value.”
Meanwhile, the longer this drags on, the more second-order effects start to bite. Storage pressure builds, production risks emerge, and the system begins to strain in ways that futures prices cannot ignore. There was little major reaction to news that key producer United Arab Emirates had decided to withdraw from the OPEC and OPEC+ oil cartels on Friday, calling it a strategic decision.
Still, CNN also cited sources familiar with the mediation as saying the two sides were not as far apart as they seemed. It added that intense diplomacy continued and talks were focused on a staged process with the first part of a potential deal aimed at returning to the pre-war status and reopening the Strait. Iran’s nuclear programme would be dealt with down the line, it said.
Despite the uncertainty, Asian equity markets mostly rose, with Hong Kong up more than one percent, while Shanghai, Seoul, Wellington, Manila, Bangkok, Mumbai, and Jakarta also advanced. Sydney, Singapore, and Taipei fell along with London, Paris, and Frankfurt. Tokyo was closed for a holiday. Traders were given a weak lead from Wall Street, where the Nasdaq led losses owing to a tech selloff that came on the back of a report in the Wall Street Journal that ChatGPT-maker OpenAI had missed targets on the number of users and revenue.
The news came as markets gear up for the release of earnings from Wall Street titans Amazon, Google, Meta, and Microsoft this week. The Federal Reserve will also conclude a two-day meeting later in the day, with investors keeping tabs on its outlook for inflation and interest rates as energy costs soar.
– Key figures at 0715 GMT –
West Texas Intermediate: UP 1.8 percent at $101.76 a barrel
Brent North Sea Crude: UP 1.8 percent at $113.23 a barrel
Hong Kong – Hang Seng Index: UP 1.7 percent at 26,111.84 (close)
Shanghai – Composite: UP 0.7 percent at 4,107.51 (close)
Tokyo – Nikkei 225: Closed for a holiday
London – FTSE 100: DOWN 0.7 percent at 10,262.60
Euro/dollar: DOWN at $1.1700 from $1.1712 on Tuesday
Pound/dollar: DOWN at $1.3501 from $1.3515
Dollar/yen: UP at 159.66 yen from 159.64 yen
Euro/pound: UP at 86.66 pence from 86.64 pence
New York – Dow: UP 0.1 percent at 49,141.93 (close)
© 2024 AFP
