LONDON: Oil prices climbed above $110 a barrel on Tuesday as concerns grew over delays in reopening the Strait of Hormuz, while global equities came under pressure amid rising inflation fears and uncertainty over interest rates.
Brent crude for June delivery rose as much as 3.4 per cent intraday to $111.86 a barrel, before trading around $111.51, up just over three per cent.
US West Texas Intermediate (WTI) crude for June gained about 3.6 per cent to $99.84 a barrel, extending gains from the previous session.
The rally comes amid a lack of progress in reopening the strategic Strait of Hormuz, which Iran has blockaded since the start of the US-Israeli offensive two months ago.
The waterway is a critical route for global oil and gas shipments, and its closure has sent shockwaves through energy markets.
Pakistan-led diplomatic efforts to end the conflict are under way, with the United States considering Tehran’s latest proposal to unblock the strait.
US President Donald Trump at the weekend scrapped a planned visit by his envoys, Steve Witkoff and Jared Kushner, to Islamabad, dampening expectations of imminent progress.
“Right now, the market is not optimistic about the chance of a deal to reopen the Strait due to Iran’s request to push discussions about nuclear disarmament into the future,” said Kathleen Brooks, research director at XTB.
Meanwhile, the United Arab Emirates said it would withdraw from OPEC and the broader OPEC+ group from May 1.
The move added to uncertainty in oil markets already grappling with geopolitical tensions and supply disruptions.
Stock markets under pressure
Global stock markets weakened as investors weighed the implications of higher energy costs on inflation and economic growth.
The tech-heavy Nasdaq Composite fell 1.4 per cent, dragged down by losses in companies linked to OpenAI after a Wall Street Journal report said the firm had missed user and revenue targets.
Shares in Oracle, which is expanding data centre capacity linked to OpenAI, dropped more than four per cent.
Brooks warned that weaker performance by OpenAI could undermine the artificial intelligence-driven rally in US equities.
“This news may threaten the AI investment theme that has driven US stock markets to record highs,” she said.
The development has also put a spotlight on spending by major technology firms, including Amazon, Google, Meta and Microsoft, ahead of their earnings later this week.
European stock markets ended mostly lower, while Asian markets also declined.
Investor sentiment was further dampened after the Bank of Japan raised its inflation forecasts and cut growth projections due to rising oil prices, while keeping its key interest rate unchanged.
“This triggered profit-taking. A similar picture could emerge at the meetings of the US Federal Reserve and the European Central Bank,” said analyst Andreas Lipkow at CMC Markets.
The US Federal Reserve began a two-day policy meeting on Tuesday, with markets closely watching for signals on interest rates amid mounting inflationary pressures.
The European Central Bank is due to meet on Thursday.
Key market moves
In currency markets, the dollar strengthened against the yen, trading at 159.59 yen, while the euro edged down to $1.1712.
The pound also slipped to $1.3509.
Equity indices showed mixed performance.
The Dow Jones Industrial Average was marginally higher at 49,221.82 points, while the S&P 500 fell 0.7 per cent and the Nasdaq Composite dropped 1.4 per cent.
In Europe, London’s FTSE 100 closed slightly higher, while Paris’s CAC 40 and Frankfurt’s DAX ended in negative territory.
Asian markets also declined, with Tokyo’s Nikkei 225 and Hong Kong’s Hang Seng both down around one per cent.
