Oil Falls, Hopes for Iran Ceasefire Deal
Oil prices weakened in early Asian trading after US President Donald Trump expressed optimism that a permanent ceasefire agreement with Iran could be reached before the current ceasefire expires next week. Brent fell 1.4% to around US$98 per barrel, paring gains from the previous session, while gold and the dollar remained relatively stable.
Markets believe continued negotiations could potentially reopen the Strait of Hormuz, thereby easing oil pressures, inflation, and boosting global growth prospects. However, the timing and durability of the deal remain uncertain. Trump said the chances of a deal “look very good” and claimed—without evidence—that Iran had agreed to conditions previously rejected, including giving up nuclear material, abandoning nuclear weapons ambitions, and including “free oil” and the opening of Hormuz. Tehran has not confirmed these concessions.
Caution remains prevailing among policymakers. Several delegates at the IMF and World Bank meetings in Washington warned that markets could be underestimating the economic impact of the war. On the geopolitical front, Trump also announced a 10-day ceasefire between Israel and Lebanon, which was later confirmed by Israeli Prime Minister Benjamin Netanyahu, although the announcement did not mention Hezbollah.
In global asset markets, a mild risk-off sentiment was evident in Asia, with the regional MSCI index down 0.5%. US stock futures were mixed, after the S&P 500 and Nasdaq 100 closed higher, setting records for the second straight day, led by technology stocks. On the corporate front, US financial sector earnings reports delivered mixed results, while cooler US data this week—including producer and import prices, as well as lower-than-expected initial jobless claims—supported Wall Street's rally.
Analyst commentary also suggests the market is becoming weary of geopolitical headlines. Ian Lyngen of BMO believes oil's weakness reflects "headline fatigue," with the consolidation pattern indicating the influence of recent geopolitical news is beginning to wane. However, market participants are still monitoring two key variables: whether there is concrete progress toward reopening Hormuz, and whether the US's optimistic statements translate into a credible and sustainable agreement. (asd)*
Source: Newsmaker.id
