Oil prices drop awaiting Mideast peace progress

AFP | London

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Oil prices fell and global stock markets traded mixed yesterday awaiting an update on a US plan to end the Middle East war and reopen the Strait of Hormuz.

After having plunged more than 10 percent at one point Wednesday on peace hopes, crude futures fell nearly another four percent.

The benchmark international oil contract Brent Crude was back under $100 per barrel. European stock markets declined after big gains the previous session, while leading Asian markets climbed.

Tokyo soared 5.6 percent, which largely reflected resumption of trading in Japan after the country’s public holidays this week.

“The wild streak of enthusiasm which hit markets amid hopes for a major de-escalation in the Iran conflict is tempering,” noted Susannah Streeter, chief investment strategist at Wealth Club.

“There’s a realisation that there are more hurdles to climb for a longer-term resolution to be agreed, even though Iran is reported to be studying a US peace proposal aimed at formally ending the conflict.”

US President Donald Trump said an agreement could be near after positive talks, with Iran adding that it would pass on its latest position to mediator Pakistan.

The war, launched by the United States and Israel in late February, has seen Iran respond with attacks across the Middle East and impose a chokehold on the Strait of Hormuz, the gateway to the Gulf oil and gas industries and a strategic trade route.

In foreign exchange yesterday, the dollar lost some of its safe haven support.

Investors in Tokyo were closely watching the yen after speculation of intervention by the Japanese government to prop up the beleaguered currency.