Oil prices rose on Tuesday while global equities sent mixed signals, as cautious optimism over a potential deal between the United States and Iran was tempered by fresh military strikes in the Middle East.
Brent crude climbed more than 1% in early Asian trade to around 97.32 dollars a barrel, recovering some ground after the previous session’s sharp losses. US West Texas Intermediate was little changed on the day but remained significantly lower than last week’s levels, reflecting the market’s ongoing uncertainty.
The rebound comes as diplomatic efforts continue behind the scenes. Iran’s foreign minister and senior negotiators travelled to Doha for talks with Qatar’s leadership, signalling that discussions remain active despite both Washington and Tehran playing down expectations of a swift breakthrough.
Reports suggest that a phased reopening of the Strait of Hormuz is under consideration, potentially within a month of any agreement. The strategic waterway, which once carried about a fifth of global oil and gas shipments, has been central to the recent surge in energy prices.
Yet the path to de escalation remains uneven. Even as negotiations continued, US forces carried out strikes in southern Iran on Monday, targeting what officials described as defensive threats including vessels allegedly attempting to deploy naval mines and missile launch infrastructure. The actions underscored the fragile nature of the situation, where diplomacy and military activity are unfolding simultaneously.
For markets, this dual track has made it difficult to establish a clear direction. Investors are weighing the prospect of restored energy flows against the risk of further escalation. The result has been volatility rather than conviction, particularly in oil, where prices have swung sharply in recent sessions.
Equity markets reflected that uncertainty. MSCI’s broad index of Asia Pacific shares outside Japan rose 0.8%, suggesting some resilience in investor sentiment, while Nikkei 225 slipped 0.2%. Futures in the United States pointed higher, with the Nasdaq and S&P 500 both gaining, while European markets painted a more mixed picture.
Currency markets showed a mild shift towards caution. The US dollar steadied on renewed demand for safer assets, though it remained below recent highs. The euro and sterling both edged lower, while the yen held firm, indicating a degree of underlying risk aversion.
Bond markets were largely stable after last week’s sell off, which had been driven by fears that persistently high energy prices could reignite inflation and force central banks to tighten policy further. Those concerns have not disappeared, particularly if oil prices remain elevated for an extended period.
At the centre of it all is the question of whether a deal is genuinely within reach. Markets have repeatedly reacted to signals of progress only to be disappointed by setbacks. Until there is clarity on the substance and timing of any agreement, traders are likely to remain cautious.
For now, the global economy continues to navigate a delicate balance. The prospect of peace offers relief, but the persistence of conflict and uncertainty means that volatility is unlikely to fade anytime soon.
