Markets gyrate on uncertainty over Trump’s Iran comments

• Five-day halt to hits on Iran energy plants
• Oil rises after Iran denies talks took place
• US and Asian stock markets higher

Equities gained overnight after President Donald Trump postponed US strikes against Iranian power plants, while oil also rose, reflecting uncertainty after Iran denied peace talks had occurred and as concerns linger over the war’s long-term impact on energy markets.

Brent crude increased 4.27 percent to $104.21 a barrel by 04:16 GMT on Tuesday, while West Texas Intermediate fetched $91.86, up 4.23 percent.

Oil slid on Monday after Trump said he had ordered strikes against Iran’s energy facilities be stopped as US and Iranian officials had engaged in “very good and productive conversations regarding a complete and total resolution of our hostilities”.

Via Iranian state-controlled media, representatives of Iran’s Foreign Ministry and parliament rejected Trump’s claims about open negotiations with the US. 

Trump’s message followed a threat he made on social media on Saturday that the US would “obliterate” power stations across the Islamic Republic if it did not open the Strait of Hormuz — through which about one-fifth of global oil supplies would normally transit — to all traffic within 48 hours. 

“Mr Trump escalates on the weekend and de-escalates on weekdays. You’ve seen it happen more than once and it works, the market responds every single time,” Bader Al-Saif, founding president of Al-Saif Consulting and assistant professor at Kuwait University, told AGBI. 

Al-Saif said the decentralised nature of Iran’s governance structure following US-Israeli strikes on its leadership makes it hard to know who might be carrying out backdoor negotiations with the Americans. 

“The next few hours will clarify this,” Al-Saif said. “But the point is, just like Trump dragged us all of a sudden into this without planning, without partnering, without telling anyone about it, he will end it quickly, I think.”

The loss of global crude supply last week amounted to around 11.5 million barrels per day, an analysis by data platform Vortexa found. 

Further reading:

• Oil drops after Trump says US held ‘productive’ talks with Iran
• Gold slips 3% to four-month low
• The big question in Houston: what does the US want from the Gulf?

Sultan Al Jaber, CEO of Abu Dhabi oil giant Adnoc, said on Monday in recorded video remarks to the CERAWeek conference in Houston that “weaponising the Strait of Hormuz is not an act of aggression against one nation. It is economic terrorism against every nation.

“And no country should be allowed to hold Hormuz hostage, not now, not ever.”

In his speech, Al Jaber, who also serves as the Emirati minister of industry and advanced technology, doubled down on Adnoc’s investment commitments and partnerships with the US. 

US markets closed the day higher, with the S&P, Nasdaq and Dow Jones stock indexes up 1.15, 1.4 and 1.4 percent, respectively. 

Asian equities were broadly up in early Tuesday trade. Japan’s Nikkei 225 rose 1.9 percent, while South Korea’s KOSPI added more than 1 percent. 

Gold futures for April were down nearly 4 percent at $4,393.80 per ounce.

Gulf markets, which had stopped trading before Trump’s latest comments, tumbled on Monday, with Dubai down 3 percent and Abu Dhabi declining 1.5 percent. 

The US president’s promise of a five-day pause to strikes on Iranian power plants brought a “sigh of relief” to the Gulf, where fears of further escalation were mounting, Colby Connelly, a Dubai-based senior fellow at the Middle East Institute, said during a virtual event on Monday.

“But I don’t want to sound naive about the situation at all,” Connelly said. “I think [this] is something that could certainly be removed just as easily as it came into effect.” 

Even if the war ended soon, and tankers could travel again through Hormuz, energy prices are not going to “crater”, Connelly said. 

“It will take time to get production started in various parts of the region. It can’t be turned on and off like a light switch.”