London (AFP) – Oil prices plunged more than 10 percent on Friday after Iran said the Strait of Hormuz would be “completely open” for the rest of the ceasefire with the United States, and stock markets surged. Iran’s Foreign Minister Abbas Araghchi said on X that “passage for all commercial vessels through the Strait of Hormuz is declared completely open for the remaining period of ceasefire.” The strategic waterway, through which one-fifth of the world’s crude oil normally flows, has been disrupted by Iran since the US-Israeli offensive began, at one point sending oil prices to a peak of nearly $120 a barrel and threatening to disrupt the global economy.
Both Brent, the benchmark international contract, and its US equivalent WTI fell below $90 per barrel following Tehran’s announcement. “This news is having an immediate impact on markets,” said Kathleen Brooks, research director at XTB. Wall Street’s main stock indices jumped higher, with both the S&P 500 and the Nasdaq Composite building on record highs struck Thursday. “This is the biggest development so far during the ceasefire, and it gives hope that the war will end soon, and supply chains will return to some normality,” Brooks said.
It was not clear whether Araghchi was speaking of the 10-day truce agreed by Lebanon and Israel, which went into effect late Thursday, or an earlier two-week truce between Iran and the United States that began on April 8. But Araghchi’s declaration bolstered hopes for further peace talks and a renewal of the ceasefire, despite US President Donald Trump saying that the US blockade of Iran’s ports remains in force. Trump said that Iran and the US were cooperating in removing mines from the strait and asserted that Iran had pledged not to close it again.
Meanwhile, France and Britain announced they will lead a multinational mission to ensure freedom of navigation in the Strait of Hormuz. They stressed the force would be entirely defensive and only deployed once a peace in the region was agreed. David Morrison at Trade Nation noted that the speed and the magnitude of the rebound of the S&P 500 — nearly 12 percent in just over two weeks — were reinforcing the rally. “The sharpness of the move has caught many investors offside, particularly those who sold during the first few weeks of the war, either to flatten their exposure or go net short,” he said.
“Now these investors are having to pay up to re-establish their existing positions, or cover their shorts and suffer painful losses.” He said the “fear of missing out” effect was also back as stock indices move into record territory, especially as the first-quarter reporting season is showing strong earnings growth. European stocks closed higher, with both Frankfurt and Paris gaining two percent. Asian stock markets mostly closed lower before Iran’s announcement, with Tokyo among the biggest losers after reaching a record high Thursday, and Taiwan’s TAIEX index dropped after hitting a market capitalisation of $4.14 trillion. That put the index ahead of London’s benchmark FTSE 100 and made the TAIEX the world’s seventh-biggest index by value, according to Bloomberg data.
– Key figures around 1530 GMT –
Brent North Sea Crude: DOWN 10.7 percent at $88.74 a barrel
West Texas Intermediate: DOWN 11.1 percent at $81.07 a barrel
New York – Dow Jones: UP 2.0 percent at 49,542.51 points
New York – S&P 500: UP 1.3 percent at 7,133.41
New York – Nasdaq Composite: UP 1.7 percent at 24,500.91
London – FTSE 100: UP 0.7 percent at 10,667.63 (close)
Paris – CAC 40: UP 2.0 percent at 8,425.13 (close)
Frankfurt – DAX: UP 2.3 percent at 24,702.24 (close)
Tokyo – Nikkei 225: DOWN 1.8 percent at 58,475.90 (close)
Hong Kong – Hang Seng Index: DOWN 0.9 percent at 26,160.33 (close)
Shanghai – Composite: DOWN 0.1 percent at 4,051.43 (close)
Euro/dollar: UP at $1.1808 from $1.1784 on Thursday
Pound/dollar: UP at $1.3558 from $1.3529
Dollar/yen: DOWN at 158.06 yen from 159.14 yen
Euro/pound: DOWN at 87.07 pence from 87.09 pence
© 2024 AFP
