Oil climbs, stocks slip as Trump dashes hopes of quick end of war

AFP | London

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Oil surged and stocks fell yesterday after Donald Trump threatened more heavy strikes on Iran and offered no solution to reopening the key Strait of Hormuz.

But stocks clawed back some of their losses and oil receeded from its highs ahead of a threeday weekend that will allow investors to catch their breaths as they await for new developments in the Middle East war.

Investors had initially found little solace in the US president’s address to the nation, in which he again urged countries dependent on the waterway for energy supplies to reopen it themselves.

“Trump didn’t offer a clear path to a relatively quick resolution to the Iran war or a reopening of the Strait of Hormuz,” said Charles Schwab analyst Joe Mazzola.

After being down more than one percent, European markets closed mixed with London higher, and Paris and Frankfurt slightly lower.

New York shares had opened sharply lower but by late morning had clawed back most of their losses.

Signs of de-escalation had buoyed markets in recent sessions, but Trump’s late Wednesday televised speech dashed those hopes.

“Trump’s much anticipated address delivered little to nothing new on potential timelines or conditions for ending hostilities against Iran,” said Deutsche Bank managing director Jim Reid. “There was no signal of the US seeking an imminent offramp out of the war.”

International oil benchmark, Brent North Sea crude, which had fallen below $100 a barrel ahead of Trump’s speech, went on to rally around eight percent to above $109 per barrel, but had retreated to about $106 by late afternoon in Europe.

London was one of the few markets to rise, finishing 0.6 percent higher, boosted by oil companies BP and Shell rising almost three percent.

Paris dropped about half a percent, even as oil giant TotalEnergies was up almost three percent on reports it made a one billion dollar profit in March trading petroleum products.

Most markets in Europe and the United States are closed Friday for Good Friday.

Earlier in the day, Tokyo closed down more than two percent and Hong Kong and Shanghai also fell.

World Bank Managing Director Paschal Donohoe said he was fearful about the global economic impact of the crisis.

“We are extremely concerned regarding the effect that this will have on inflation, on jobs and on food security,” he told AFP as the Bank partners with the International Monetary Fund and International Energy Agency to coordinate aid responses.