On Tuesday, crude oil prices fell below $80, driven by optimism that the Strait of Hormuz will reopen soon, easing global inflation.
Prices fell more than 5 per cent after The Wall Street Journal reported that Washington may ease Iranian oil sanctions as part of a Middle East peace deal, allowing Tehran to quickly resume crude oil sales.
By day’s end, Brent crude closed at $78.96 per barrel, down 5.1 per cent. While West Texas Intermediate dropped 5.8 per cent to $76.05.
Industry experts and shipping companies cautioned that restoring full operations in the strait will take time. However, analysts noted that markets view the situation as significantly improved compared to earlier concerns about prolonged conflict. Iranian news sources reported that three oil tankers and two cargo ships have already passed through the waterway.
However, it was reported that trading on Wall Street today was mixed. The Dow Jones Industrial Average closed at a record high for the second consecutive day. While the S&P 500 and Nasdaq declined. Analyst Patrick O’Hare of Briefing.com stated that these movements indicate sector rotation rather than a broad sell-off, consistent with the current bull market.
European markets closed higher, while Asian exchanges posted mixed results. Kathleen Brooks at XTB said, “Although the deal is not yet signed, markets already see a peace dividend. European indices are catching up to the US, though some remain below pre-war levels, including London’s FTSE 100.”
Tehran blockaded the strait following US and Israeli strikes on February 28, and Washington subsequently halted shipping to and from Iranian ports. Analysts warn that despite the sharp drop in oil prices, supply may remain tight for weeks or months.
In other economic news, central bank decisions are in focus this week. US Federal Reserve Chair Kevin Warsheldr held his first policy meeting on Tuesday, and most expect rates to remain unchanged as the effects of the war persist.
Meanwhile, the Bank of Japan raised interest rates to their highest level since 1995, though the yen showed little reaction.
In corporate news, Elon Musk’s SpaceX gained about five per cent, following a previous 17 per cent rally. These gains moved SpaceX ahead of Amazon, making it the world’s fifth-largest company by market value.
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