Oil prices have climbed back to $100 a barrel as optimism over a US-Iran peace deal fades, impacting global energy markets. Brent crude rose by about 3.5% on Tuesday morning, reversing a slight decline over the Bank holiday weekend.
Investors had been hopeful that talks between the US and Iran could lead to a peace agreement and the reopening of the Strait of Hormuz. However, while the US military carried out strikes in southern Iran, President Donald Trump stated on social media that negotiations were “proceeding nicely.”
UK stocks saw a positive start, with the FTSE 100 rising 0.6% to 10,526, contrasting with European peers. France’s Cac 40 fell by about 1%, and Germany’s Dax index dropped 0.7%. UK borrowing costs continued to ease, with 30-year gilt yields falling five basis points to 5.53% and ten-year yields down to 4.86%.
Rich McDonald, market analyst at IG, described the morning as “messy” for global markets. He noted that oil initially fell 7% on hopes of a breakthrough but rallied 3% as confidence waned. “At best, the ceasefire appears to have been extended, talks are still alive, and that lowers the immediate risk of a fresh Hormuz shock – but we don’t yet seem to have made progress on the hard issues,” he said.
McDonald highlighted unresolved issues including enriched uranium, sanctions, regional security, and full normalisation of Strait of Hormuz flows, with markets awaiting progress reports from ongoing negotiations.
