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Oil at Three-Week High as US-Iran Peace Talks Stall
The new week begins with the oil price rising once again, as stalled US-Iran peace talks threaten to extend disruption to crude supplies from the Middle East. Brent crude jumped around 2% this morning to a high of $107.97 a barrel, marking the highest level since the two sides agreed a ceasefire on 7 April.
Prices rose after Donald Trump cancelled his plan to send US envoys Steve Witkoff and Jared Kushner for ceasefire talks in Pakistan on Saturday, saying “too much time” has been “wasted on traveling”. The US president then doubled down on this position, telling Fox News: “If they want to talk, they can come to us, or they can call us. You know, there is a telephone. We have nice, secure lines.”
However, there are signs of positive developments. Axios reports that Tehran has given the US a new proposal to reopen the Strait of Hormuz and end the war, with nuclear negotiations postponed for a later date. Geopolitics will continue to dominate the markets at the start of a big week, with several major central banks taking interest rate decisions in the days ahead.
As Mohit Kumar, economist at Jefferies, explains: “Talks have stalled between US and Iran as Iran has stated that it will not negotiate till the US blockade remains in place, while US has stated that it doesn’t know who it is negotiating with. Our base case remains that we are moving towards a deal but tail risk of short term escalation remains. It is not in the interest of either parties to escalate further. The latest Iran proposal shows the wiliness of Iran to negotiate, while Trump already wants a deal. Hence, we believe that we will eventually move towards a deal, but with some speed bumps along the way.”
The agenda includes the CBI distributive trades survey of UK retail at 11am BST and the Dallas Fed manufacturing index survey at 3.30pm BST.
