Oil Prices Slip, Stocks Rise On Hopes For Middle East Peace Deal

LONDON: Global oil prices retreated, and stock markets climbed on Tuesday on rekindled hopes for a deal to end the Middle East war and reopen the key Strait of Hormuz to end disruptions that have sent energy prices soaring.

Pakistan has intensified diplomatic efforts a new round of the US-Iran talks could take place as early as Thursday, according to a report by the Associated Press citing US officials and a diplomat from a mediating country.

Officials familiar with the matter said both sides have agreed in principle to resume talks following recent high-level negotiations, although the final venue has yet to be confirmed.

Islamabad, which hosted the latest round of negotiations, is once again under consideration.

Meanwhile, on hopes of peace, Frankfurt led European stock markets higher in midday deals, gaining nearly one percent.

London edged up just 0.1 percent, however, as a retreat by oil prices from $100 a barrel weighed on share prices of energy majors BP and Shell.

Asia’s leading stock markets closed with sizeable gains, while the dollar, seen as a haven in times of market turmoil, dropped against its main rivals.

The United States said “the ball is in the Iranian court” on ending the Mideast conflict as diplomats accelerated efforts for a new round of peace talks after weekend negotiations failed to produce a final agreement.

According to Reuters, communication between the parties has remained active since the Islamabad meeting, with the US maintaining contact with mediators.

Pakistan has continued to play a facilitating role by exchanging messages between Tehran and Washington, helping to keep dialogue channels open during a sensitive phase of negotiations.

The renewed push for talks highlights sustained international efforts to build on recent engagement and prevent further escalation in the region.

“Stocks saw an upswing while oil prices took a dip following President Donald Trump’s suggestion to reopen talks with Iran, sparking optimism for a potential agreement that might alleviate tensions in the Middle East,” said Patrick Munnelly, a market strategist at Tickmill Group.

Trump said Iranian representatives had called Washington since a US delegation returned empty-handed from negotiations in Islamabad.

“They’d like to make a deal. Very badly, very badly,” Trump told reporters.

At the same time, the US has implemented a naval blockade of Iranian ports at the Strait of Hormuz, through which one-fifth of world oil passes.

The International Energy Agency warned Tuesday that demand for crude would likely see the biggest slump in the second quarter since the Covid pandemic slammed the global economy in 2020.

Surging prices will force many countries and industries to curb oil use, and “demand destruction will spread as scarcity and higher prices persist”, the agency said in its monthly report.

British energy giant BP meanwhile, said that its oil trading operations had been “exceptional” in the first quarter as the Middle East war triggered volatility on global markets.

Crude futures have peaked at almost $120 a barrel during the war from around $72 on the conflict’s eve.

Investors are also keeping an eye on the flood of first-quarter earnings being released this week and next for signs of how the Middle East war is impacting corporate bottom lines.

French luxury conglomerate LVMH reported Monday that sales fell six percent in the first three months of the year, saying the war in the Middle East depressed business in the region.

Its shares were down 2.4 percent on the Paris stock exchange.