Crude oil prices extended their gains on Tuesday, with Brent crude climbing above $91 a barrel as hopes for a breakthrough between the United States and Iran over the Strait of Hormuz continued to fade. The development added fresh pressure to global financial markets, with most Asian stocks falling as investors weighed the possibility of prolonged geopolitical tensions and higher energy costs.
The uncertainty comes after a deadline for a truce between Washington and Tehran expired without a major breakthrough. US President Donald Trump has indicated that he does not intend to extend the 60-day truce, while Iran has dismissed the agreement as irrelevant, accusing the United States of violating it. Although talks are still taking place, officials on both sides have acknowledged the deep lack of trust, making a quick resolution increasingly difficult.
Investors are particularly concerned that prolonged tensions could keep crude oil prices elevated for an extended period. Brent crude rose 0.2 per cent to $91.02 a barrel, while West Texas Intermediate gained 0.6 per cent to $85.01. Higher oil prices could add to inflationary pressure at a time when markets are already watching the US Federal Reserve closely for clues about future interest-rate decisions.
The impact was visible across global equities, with Japan’s Nikkei 225 dropping 2.5 per cent, while markets in Seoul and Taipei also recorded losses of more than one per cent. Sydney, Singapore and Mumbai slipped as well, although Hong Kong, Shanghai, Manila, Wellington and Jakarta managed to post gains. European markets were mixed, with London edging higher while Paris and Frankfurt moved lower.
For investors, the biggest concern is that the Middle East crisis, rising oil prices and higher borrowing costs could begin to reinforce one another. With US Treasury yields reaching their highest levels since 2007 and uncertainty surrounding the Strait of Hormuz continuing, markets may remain volatile in the days ahead. Until there is a clearer diplomatic breakthrough, traders are likely to keep a close watch on crude prices, inflation and the direction of global stocks.
source: punch
