Stocks rise and oil dips on hopes of 15-point Iran peace plan
Markets in Asia, Europe and US move higher after Iran says it will permit ‘non-hostile’ ships through strait of Hormuz
The price of oil has dipped and stock markets around the world have moved higher on reports that the US has sent a 15-point framework for peace to Iran, amid hopes of a ceasefire in the Middle East.
Positive sentiment may also have been bolstered by reports that Iran had announced it was permitting “non-hostile” ships to pass safely through the strait of Hormuz, in a move that could help to reopen the vital shipping lane.
Oil prices had fallen by 4% in the early hours of Wednesday, with the Brent crude benchmark sinking below $100 a barrel as traders reacted to the prospect of an easing of the squeeze on supplies.
Stock markets in Asia moved higher over the day, with Japan’s Nikkei closing up 2.9% and Hong Kong’s Hang Seng adding just over 1%.
European markets also rose. The FTSE 100 in London was up more than 1% by mid-afternoon, Germany’s Dax was trading 1.4% higher and France’s Cac 40 climbed by about 1.2%. US stocks extended gains on the open, with the Dow Jones 1.1% ahead, the Nasdaq gaining 1.1% and the S&P 500 also trading just over 1% higher.
Oil later rose slightly to hover around $100 for most of the day amid mixed signals about the status of negotiations between the US and Iran, after Tehran denied any talks had taken place since the start of the war.
Iran’s effective closure of the strait of Hormuz has all but halted global shipments of oil and gas in a narrow channel through which 20% of global supplies normally transit, sparking what the International Energy Agency has called the largest ever disruption to oil supply.
Just four vessels were recorded as having transited the strait on Tuesday, the latest available data from S&P Global showed, although others may have done so with their transmitters switched off. That represents less than 3% of the historical average daily traffic level of 138 vessels registered before the war.
More than 30 countries including the United Arab Emirates, the UK, France, Germany, Canada and Australia have signed a joint statement agreeing to work on “appropriate efforts” to safeguard the Hormuz channel.
However, Iran’s foreign affairs ministry has told the UN security council and the International Maritime Organization that “non-hostile” vessels – defined as those not taking part in or supporting “acts of aggression against Iran” – are permitted to pass through the strait.
A third of the world’s fertilisers also pass through the waterway, prompting a top official at the World Trade Organization (WTO) to warn that disruption to fertiliser supplies is threatening global food security as a result of the impact on food production.
“Fertilisers are the number one issue of concern today. If there is no more fertiliser, there is an impact on quantities but also on prices,” the WTO’s deputy director general, Jean-Marie Paugam, told Agence France-Presse. “The effect compounds the following year: harvests shrink and prices rise.”
Volatility in global markets since the outbreak of conflict in the Middle East has also affected the price of gold, traditionally seen as a safe haven asset during troubled times.
Gold’s historic run – where it moved above $5,000 an ounce for the first time in January – appears to have come to an end since the outbreak of the Iran conflict. After holding steady in the first days of the war, gold has since fallen by approximately 13% to about $4,550, calling into question the metal’s traditional role as a financial safety net.
Separately, the boss of the world’s largest asset manager said a prolonged conflict in the Middle East could lead to a rise in oil prices to $150 a barrel that would trigger a global recession.
Larry Fink, the chief executive of BlackRock, which controls assets worth $14tn (£10.4tn), told the BBC that if Iran remained a threat and oil prices remain elevated there would be profound implications for the global economy.