SINGAPORE: Oil prices jumped, the US dollar lifted from lows and stock markets wobbled on Monday (Apr 20) as rising tension in the Middle East kept shipping in and out of the Gulf to a bare minimum, though traders were holding out hope for a resolution.
The ceasefire in the Iran war, due to run until Tuesday, was in doubt after the US seized an Iranian cargo ship and Tehran’s top military command vowed to retaliate.
Iran has re-imposed its de facto closure of the Strait of Hormuz, though Kpler data showed that more than 20 vessels carrying oil products, metals, gas and fertiliser passed through it on Saturday, the busiest day for the chokepoint since Mar 1.
Brent crude futures jumped about 6 per cent to US$96 a barrel in early Asian trade. The dollar, which sold off sharply on Friday when the strait briefly opened, rose slightly.
S&P 500 futures fell around 0.7 per cent, a modest move considering the index notched a record closing high on Friday. Asia-Pacific markets were mixed, with Australia’s S&P/ASX 200 down 0.5 percent, Japan’s benchmark Nikkei up 0.7 per cent and South Korea’s KOSPI up 0.3 per cent.
Bond markets, which rallied on Friday, retreated.
“The headlines look bad; it looks like there’s disagreement … which has led to a little bit of re-escalation,” said Damien Boey, portfolio strategist at Wilson Asset Management in Sydney.
“But I think, ultimately, both sides want to be able to do a deal – that’s part of the reason why the market’s optimistic and not selling off too much.”
Iran rejected new peace talks with the US, its state news agency reported on Sunday, hours after US President Donald Trump said he was sending envoys for talks in Pakistan and would launch new strikes on Iran unless it accepts his terms.