New York (AFP) – Oil prices dropped below $80 a barrel Tuesday on optimism over the promised reopening of the Strait of Hormuz, easing inflation pressures on global economies. The slide accelerated to more than five percent after The Wall Street Journal reported that Washington could ease sanctions on Iranian crude as part of the deal to end the Middle East war, allowing Tehran to immediately sell crude and refined oil products. International benchmark Brent North Sea crude ended at $78.96 a barrel, down 5.1 percent. The main US oil contract, West Texas Intermediate, dropped 5.8 percent to $76.05 a barrel.
Oil industry experts and shipping companies have cautioned that the restoration of normal operations after the strait’s near shutdown will take time. But markets view the situation as much improved compared with the worst-case scenario of continued fighting with no timeframe on the vital waterway’s reopening, analysts said. Iranian media reported that three oil tankers and two cargo ships had already passed through the strait.
Meanwhile, Wall Street stocks had a mixed day, with the Dow rising to a second consecutive record close, while the S&P 500 and Nasdaq retreated. Briefing.com analyst Patrick O’Hare described the movements as a rotation. “We’re not seeing a mass exodus out of the market,” said O’Hare, who views the dynamics as consistent with a bull market. Europe’s main markets closed higher, while Asia ended mixed. “Although the deal has not been formally signed, there already appears to be a peace dividend for markets,” said Kathleen Brooks, research director at trading group XTB. “We are seeing European markets play catch-up with the US, and this could continue, as some European indices remain below their pre-war levels,” including London’s FTSE 100 index, she added.
Tehran blockaded the strait after the United States and Israel launched strikes against Iran on February 28. Washington later halted shipping to and from Iranian ports. Despite the fall-off in oil prices, analysts warned that market conditions could remain tight for weeks or even months after the end of the conflict. This week’s focus is also on a wave of central bank decisions. The US Federal Reserve chair, Kevin Warsh, kicked off his first meeting in charge of the central bank’s rate-setting committee on Tuesday, with policymakers largely expected to keep rates steady as the war fallout ripples through the world’s largest economy. The Bank of England is also expected to stand pat.
The yen was little changed after the Bank of Japan on Tuesday raised interest rates to their highest level since 1995. Elon Musk’s SpaceX turned in another positive performance, ending up around five percent after earlier soaring more than 17 percent. The rally has lifted SpaceX above Amazon to the fifth largest company in the world by market value.
– Key figures around 2015 GMT –
Brent North Sea Crude: DOWN 5.1 percent at $78.96 a barrel
West Texas Intermediate: DOWN 5.8 percent at $76.05 a barrel
New York – Dow: UP 0.7 percent at 52,024.70 (close)
New York – S&P 500: DOWN 0.5 percent at 7,517.40 (close)
New York – Nasdaq: DOWN 1.2 percent at 26,376.34 (close)
London – FTSE 100: UP 0.6 percent at 10,494.21 (close)
Paris – CAC 40: UP 0.8 percent at 8,447.27 (close)
Frankfurt – DAX: UP less than 0.1 percent at 24,910.41 (close)
Tokyo – Nikkei 225: UP 0.1 percent at 69,404.50 (close)
Hong Kong – Hang Seng Index: DOWN 1.4 percent at 24,493.95 (close)
Shanghai – Composite: DOWN 0.1 percent at 4,091.89 (close)
Seoul – Kospi: UP 2.1 percent at 8,726.60 (close)
Euro/dollar: UP at $1.1608 from $1.1590 on Monday
Pound/dollar: UP at $1.3427 from $1.3414
Dollar/yen: UP at 160.45 yen from 160.34 yen
Euro/pound: UP at 86.45 pence from 86.40 pence
© 2024 AFP
