Oil climbs, stocks slide as Iran war uncertainty reigns ~ EconomyLens.com

New York (AFP) – Oil prices jumped and equities slid Thursday as hopes for a peace deal between the United States and Iran wavered, with US President Donald Trump threatening to “obliterate” the country even as he claimed negotiations to end the conflict were ongoing. Markets had been buoyed at the start of this week by Trump saying that strikes targeting Iran’s energy infrastructure would be postponed, adding that the two sides were in peace talks. But uncertainty over the talks, continued strikes by all sides in the conflict, and the virtual closure of the Strait of Hormuz — through which around 20 percent of oil and liquefied natural gas normally passes — have cast a shadow over market sentiment.

On Thursday, Trump said Iran had allowed 10 oil tankers to sail through the waterway as a “present,” and pushed back a deadline for strikes on Iranian power plants to April 6. His comments on delaying strikes came after the US close, with oil paring the massive gains it had made through the day. Earlier, Brent crude closed up 5.7 percent at $108.01 per barrel, and West Texas Intermediate ended up 4.6 percent at $94.48. Kim Forrest, chief investment officer at Bokeh Capital Partners, said the war makes “for really nervous investors.” “Every day there’s only one or two stories that are really driving stocks and all else falls from there. So when they’re in a sour mood, it’s going to be a big, bad selling day.”

Wall Street’s main stock indices were down, with the Nasdaq furthest in the red, losing 2.38 percent. European and Asian markets also ended with losses. “When the oil price surges, the market playbook stays the same: stocks and bonds sell off,” said Kathleen Brooks, research director at XTB. The yield on government bonds rose across the board. Conflicting messages from the US and Iran are “raising questions about whether there is really an off-ramp to the conflict in the days ahead,” said Deutsche Bank’s Jim Reid.

Washington was said to have presented a 15-point plan to end the war. Tehran’s state-run TV reported officials had put forward their own five conditions for hostilities to end. On Thursday, Trump said taking control of Iran’s oil was an option, as Washington had done after ousting Venezuela’s leader in a military operation. Pakistan’s Foreign Minister Ishaq Dar confirmed Thursday that indirect negotiations between the United States and Iran were being held, using Islamabad as an intermediary. “Pressure on energy prices, shipping flows and broader financial conditions remains one of the few meaningful sources of leverage (Iran) retains,” said Saxo Markets’ Charu Chanana. “There is therefore little incentive to relinquish that leverage prematurely, particularly if market stress strengthens its negotiating position,” she added.

The OECD on Thursday cut its eurozone growth outlook and forecast higher inflation for 2026 as energy prices have skyrocketed. The conflict has also weighed on German consumer sentiment heading into April, a survey showed Thursday, adding to the woes facing Europe’s top economy. France, which holds the G7 Presidency, will on Monday host a meeting bringing together the group’s finance ministers, energy ministers, and central bank governors.

– Key figures at around 2015 GMT –

Brent North Sea Crude: UP 5.7 percent at $108.01 a barrel

West Texas Intermediate: UP 4.6 percent at $94.48 a barrel

New York – Dow: DOWN 1.0 percent at 45,960.11 points (close)

New York – S&P 500: DOWN 1.7 percent at 6,477.16 (close)

New York – Nasdaq: DOWN 2.4 percent at 21,408.08 (close)

London – FTSE 100: DOWN 1.3 percent at 9,972.17 (close)

Paris – CAC 40: DOWN 1.0 percent at 7,769.31 (close)

Frankfurt – DAX: DOWN 1.5 percent at 22,612.97 (close)

Tokyo – Nikkei 225: DOWN 0.3 percent at 53,603.65 (close)

Hong Kong – Hang Seng Index: DOWN 1.9 percent at 24,856.43 (close)

Shanghai – Composite: DOWN 1.1 percent at 3,889.08 (close)