Key Points
- Oil prices fall over 1 per cent as Iran-US talks raise supply hopes
- Brent crude trades near $94–95, WTI around $86-88
- Asian stocks rise to 1.2 per cent amid improving sentiment
- Markets remain volatile after sharp oil rally a day earlier
ISLAMABAD: Global oil prices slipped on Tuesday, and most markets cautiously advanced as enduring hopes for a diplomatic breakthrough in the second round of the Iran-US Islamabad talks lifted investor sentiment, even as recent tensions kept markets on edge.
Energy markets showed immediate reaction to shifting geopolitical signals. Benchmark Brent crude fell by a percentile point to around $94.5 per barrel. Likewise, West Texas Intermediate declined by 1-1.7 per cent, trading near $86–88 a barrel in early sessions.
The pullback followed a sharp surge a day earlier, when Brent jumped more than 5 per cent, and WTI nearly 7 per cent after disruptions in the Strait of Hormuz heightened supply fears.
Oil retreats after resurfacing supply fears ease
Analysts say the latest decline reflects expectations that a second round of talks between Iran and the US in Islamabad this week may end the war and allow more crude to flow from the Middle East, easing pressure on global supply chains.
At one point in early Asian trading, Brent hovered near $95 while WTI traded around $86.5, both down modestly on the day.
Despite the drop, oil remains significantly elevated compared to earlier months, reflecting ongoing risks tied to the region, where disruptions have historically affected nearly a fifth of global oil flows.
Stocks climb on renewed risk appetite
Equity markets responded positively to the easing in oil prices and diplomatic signals. Regional indices in Asia gained, with Japan’s benchmark rising about 1.2 per cent and a broader Asia-Pacific index advancing roughly 0.9 per cent.
Futures tied to the S&P 500 edged higher, pointing to cautious optimism on Wall Street, as investors rotated back into equities following recent volatility.
Market participants said the decline in oil prices helped ease inflation concerns and improved the outlook for corporate earnings, particularly in energy-importing economies.
Volatility persists despite optimism
Even with the gains, markets remain highly sensitive to geopolitical developments. Oil prices have swung sharply in recent sessions, rising above $95 before retreating again on each shift in diplomatic signals.
The broader backdrop remains fragile. The Strait of Hormuz, a critical artery for global energy trade, has seen repeated disruptions, amplifying price swings and investor caution.
Still, the persistence of diplomatic engagement has created what analysts describe as enduring hope, reflected in repeated market rebounds after each setback.
For now, that expectation continues to support equities and cap oil prices, though traders warn that any breakdown in talks could quickly reverse the trend.
