Oil Prices Rise Despite US-Iran Ceasefire Extension

Oil prices edged higher on Wednesday while Europe’s main stock markets eased amid uncertainty over the prospect of resumed Middle East peace talks following an extension to the US-Iran ceasefire.

Asian equities traded mixed as investors awaited clarity, though broadly expect both US President Donald Trump and Iranian authorities want to end a conflict that has sent oil and gas prices soaring.

“The ceasefire extension hasn’t done much to calm nerves given that worries remain about the impact of the energy squeeze on the global economy,” said Susannah Streeter, chief investment strategist at Wealth Club.

“Shipments from the Middle East are in limbo and a resolution to the conflict remains elusive, and the price of Brent crude, the benchmark, reflects this.”

Brent North Sea crude was once more closing in on $100 a barrel while the main US contract, West Texas Intermediate, traded back above $90.

Despite Trump’s announcement of a ceasefire extension to allow more time for peace talks, Iranian gunboats attacked at least one container ship in the Strait of Hormuz on Wednesday, maritime agencies said.

Trump said the US blockade of Iran’s ports would continue while Pakistani mediators try to revive dialogue. Tehran has all but shut the strait in the seven weeks since the United States and Israel launched attacks on Iran that plunged the Middle East into war, with higher energy prices threatening economic growth worldwide.

“The US and Iran may be trying to shore up leverage and playing a game of who blinks first,” said Christopher Wong, a strategist at Oversea-Chinese Banking Corp.

“Whatever the outcome, the suspense in the interim may see risk appetite being curtailed,” he said.

Away from the war, investors were keeping tabs on the confirmation hearing by senators of Kevin Warsh, Trump’s pick to replace Federal Reserve boss Jerome Powell, whose term ends in May.

Warsh told lawmakers he would not be controlled by the president as he fielded questions on his assets and central bank independence during his first hearing.

Trump has assailed Powell for not cutting interest rates more aggressively, and told CNBC on Tuesday that he would be disappointed if the new chair did not swiftly lower borrowing costs despite rising inflation.

In Britain, official data showed that annual inflation jumped to 3.3 percent in March as the Middle East war sent oil and gas prices surging.

Key Figures Around 1045 GMT:
Brent North Sea Crude: UP 0.6 percent at $99.04 a barrel
West Texas Intermediate: UP 0.5 percent at $90.15 a barrel
London – FTSE 100: DOWN 0.1 percent at 10,491.92 points
Paris – CAC 40: DOWN 0.3 percent at 8,208.83
Frankfurt – DAX: DOWN 0.3 percent at 24,209.60
Tokyo – Nikkei 225: UP 0.4 percent at 59,585.86 (close)
Hong Kong – Hang Seng Index: DOWN 1.2 percent at 26,163.24 (close)
Shanghai – Composite: UP 0.5 percent at 4,106.26 (close)
New York – Dow Jones: DOWN 0.6 percent at 49,149.38 (close)
Euro/dollar: UP at $1.1752 from $1.1749 on Tuesday
Pound/dollar: UP at $1.3520 from $1.3511
Dollar/yen: UNCHANGED at 159.25 yen
Euro/pound: DOWN at 86.91 pence from 86.96 pence