Oil prices have taken a significant nosedive, and Asian stock markets are buzzing with excitement over the potential for a peace deal that could finally put an end to the ongoing US-Israel war with Iran. Just this past Saturday, US President Donald Trump announced that an agreement with Tehran was “largely negotiated,” with details expected to surface soon. However, he urged his negotiating team not to rush into anything, leaving many to wonder about the true state of these discussions. By Monday morning, the global oil benchmark, Brent crude, saw a drop of 5.5%, settling at $97.90 (£72.64), while US-traded crude was down 5.8% at $90.99.
Now, let’s break this down, shall we? Trump had previously hinted that this deal could involve reopening the crucial Strait of Hormuz, a narrow waterway that usually sees about one-fifth of the world’s oil and liquefied natural gas (LNG) flow through it. It’s been pretty much closed since the conflict escalated on February 28. And guess what? The Nikkei 225 stock index in Japan soared above 65,000 for the first time, climbing 2.9% on the optimistic belief that the strait would soon be back in business. Japan and its neighbor South Korea have been feeling the pinch, given their heavy reliance on energy supplies from the Gulf. Meanwhile, the UK and US energy and financial markets were closed on Monday for public holidays, adding another layer of intrigue to the situation.
Now, on social media, Trump was all smiles, claiming he had a “very good call” with the leaders of Saudi Arabia, the UAE, Qatar, and others, concerning a “Memorandum of Understanding pertaining to PEACE.” He mentioned that the agreement is “largely negotiated,” awaiting final touches between the United States, Iran, and the other involved countries. But there’s a catch – he emphasized on Sunday that both sides should take their time to get this right because, as he put it, “There can be no mistakes!”
On the Iranian side, foreign ministry spokesperson Esmaeil Baqaei was quick to note that while US and Iranian positions have been aligning over the past week, it doesn’t mean they have reached consensus on important issues. He even accused the Americans of making “contradictory statements.” Since early March, the global energy sector has been on a rollercoaster ride, especially after Iran threatened to target ships in the Strait of Hormuz as retaliation for US and Israeli strikes. Although crude oil prices have dropped steeply today, they are still much higher than pre-war levels, when Brent was trading around $70 a barrel.
Let’s not forget, Tehran has also been striking Israel and US-aligned nations in the Gulf, including Saudi Arabia, Bahrain, and the UAE. A ceasefire was reached in early April, and since then, talks between Washington and Tehran have been underway for a long-term peace agreement. Saul Kavonic, head of energy research at MST Financial, even mentioned that there’s now “some light at the end of the tunnel,” hinting at some much-needed relief for oil prices in the near term. However, he cautioned that even in the best-case scenario, oil markets will remain tight until 2027 due to the necessary time for normalizing oil flows through the Strait, repairing damaged facilities, and rebuilding depleted global oil stocks.
The deal on the table reportedly includes a 60-day ceasefire extension, during which the Strait of Hormuz would be reopened. It’s a lot to unpack, and as we look forward, one can’t help but wonder what will come next in this evolving saga. Will peace finally settle in the region? Or will tensions flare up once again? The world is watching closely…
Kaynak: Orijinal Haber