Oil rebounds as markets track Iran-Israel ceasefire

London

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Oil prices recovered as stock markets diverged yesterday while traders assessed whether the Israel-Iran ceasefire would endure.

Focus was also on a NATO summit that signed off on a sharp increase to military spending by the United States and its allies.

The dollar recovered mildly, having slumped Tuesday after Federal Reserve boss Jerome Powell did not rule out the prospect of cuts to US interest rates, as President Donald Trump's tariff war risks slowing the economy.

"Optimism about the fragile ceasefire holding between Iran and Israel has bubbled through markets... but more doubts are now creeping in about the truce holding," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Trade Nation analyst David Morrison said that "Investors are mindful that the current ceasefire may break down, although that seems like a small risk for now."

Asian stock markets closed higher following rallies on Wall Street and in Europe on Tuesday on news of the ceasefire declared by Trump.

But European stocks dipped, and Wall Street opened mixed.

The world's main oil contract, Brent North Sea crude, rose 0.6 percent Wednesday after tumbling almost seven percent Tuesday