LONDON – Oil prices jumped and most stock markets fell yesterday on investor concerns over the Middle East ceasefire holding and as the key Strait of Hormuz remained largely blocked to traffic. 

Equity markets across the globe had soared and crude futures plunged Wednesday after US President Donald Trump announced the two-week halt in the Middle East war, and Iran said it would reopen the waterway transporting one-fifth of the world’s oil and gas.

But the ceasefire has been placed in doubt, largely by Israel’s ongoing attacks against Iran-backed Hezbollah in Lebanon.

The main US oil contract, West Texas Intermediate, rebounded five percent to reach almost US$100 a barrel as international calls mounted for the ceasefire to be extended after a massive wave of Israeli strikes on Lebanon killed more than 200 people.

There had been conflicting diplomatic signals about whether the fighting in Lebanon was included in the US-Iran truce Washington said that it was not and Israel made it clear that it has no intention of holding off.

“Oil prices will likely remain elevated and choppy until a more permanent agreement is struck between all parties,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.
With concerns spreading over the fragile truce, the dollar recovered some lost ground thanks to its safe-haven status.

“Even if the ceasefire holds it will take time for energy exports from the region to return to more normalised levels, so there will be an impact on growth and inflation that is still difficult to ascertain,” said Anthony Kettle at RBC BlueBay Asset Management.
“It should also be noted that there has been significant damage to infrastructure in some major energy exporters,” he said. 

– Nampa/AFP