Global stock markets climbed on Tuesday while oil prices fell, as investors bet on a potential diplomatic breakthrough in the Middle East conflict and the reopening of the Strait of Hormuz. The optimism came despite a US naval blockade around Iranian ports, announced by President Donald Trump, and inconclusive peace talks in Pakistan over the weekend.
Trump said Iranian officials had called seeking a deal, though he did not identify them. The remarks helped Wall Street’s main indexes close higher, with the Dow Jones Industrial Average up 0.6 per cent, and oil giving up earlier gains. The Strait of Hormuz, through which about a fifth of the world’s oil and gas transits, remains central to the crisis that erupted on February 28.
The US military clarified that the blockade would begin on Monday at 1400 GMT, targeting all Iranian ports in the Gulf but allowing other vessels to pass. The announcement had initially sent crude prices surging by as much as 8 per cent and Asian stocks tumbling on Monday. However, sentiment improved as markets reopened in Asia, with Tokyo’s Nikkei 225 rising 2.4 per cent and Taipei’s TAIEX hitting a record high, lifted by renewed interest in technology and artificial intelligence stocks.
Hong Kong, Shanghai, Sydney, Singapore, and Wellington also posted gains. Both main oil benchmarks retreated below $100 a barrel, with West Texas Intermediate down 2 per cent at $97.12 and Brent crude 1.5 per cent lower at $97.84.
Stephen Innes of SPI Asset Management said the market rally was built on the belief that diplomacy remains possible, even if no deal emerged from the Pakistan talks. “An open door is often enough,” he noted, adding that oil prices responded to the shift in narrative rather than physical supply changes.
Still, tensions persist. Trump warned that any Iranian “fast attack ships” approaching the blockade would be “immediately eliminated,” and claimed 34 vessels had passed through the strait on Sunday—a figure that could not be independently verified. Iran’s Foreign Minister Abbas Araghchi blamed Washington for the stalled talks in a call with his Saudi counterpart.
Analysts suggest the US aims to cut off Iranian revenue and pressure China, Iran’s largest oil buyer, to push Tehran to reopen the strait. The International Energy Agency’s Fatih Birol warned that April could prove tougher for energy markets than March, as no new cargo has been loaded since the crisis began.
Currency markets saw the dollar weaken slightly against the yen and euro, while the pound edged lower against both. The FTSE 100 in London closed down 0.2 per cent, contrasting with gains elsewhere.
