Oil prices are soaring following the collapse of the U.S.-Iran deal — Bloomberg
During Asian trading on May 31, the price of a barrel of Brent crude oil surpassed the $93 mark following a significant drop at the end of the workweek.
This was reported by Bloomberg.
The sharp rise in oil prices was triggered by a combination of factors—ranging from Iran’s direct attack on U.S. military personnel to the lack of results during the White House meeting.
The weekend brought a series of alarming developments to the oil market, which instantly reversed the previous downward trend.
The situation escalated after Iran struck a U.S. airbase in Kuwait, resulting in injuries to several U.S. service members.
At the same time, Israel launched a large-scale expansion of its ground operation in Lebanon against the Tehran-backed Hezbollah group.
Experts note that the country has not conducted a military invasion of this scale for over a quarter of a century.
Amid the escalation, Washington and Tehran attempted to agree on a package of amendments to a draft peace agreement intended to guarantee stable shipping in the Strait of Hormuz.
However, according to confidential sources cited by Bloomberg, diplomatic negotiations have stalled completely due to the intransigence of both sides regarding key demands.
The current uncertainty is forcing investors to factor additional risks into energy prices.
“Negotiations between the U.S. and Iran continue to unsettle the market and remain a source of potential price volatility,” noted Kyle Rodda, senior analyst at Capital.com. “There is a risk that the market has bought into the propaganda: the Trump administration is hyping an imminent deal, while the Iranians are actually taking a cautious approach to the issue.”
Expectations of a quick diplomatic breakthrough were not met by the end of the week due to the stance of the U.S. leadership.
U.S. President Donald Trump initially announced on social media his readiness to make a “final decision” on extending the ceasefire.
However, the U.S. president later left a meeting in the White House “situation room” without reaching any decision, according to The New York Times.
The Iranian semi-official Tasnim news agency confirmed that the parties are continuing to discuss the details, but the risk of the agreements falling apart remains extremely high.
The initial plan called for the announcement of a 60-day ceasefire, the resumption of safe tanker traffic, and the launch of global negotiations on Iran’s nuclear program.
If the parties ultimately reject each other’s proposals, the entire peace process will completely collapse.
Financial markets reacted swiftly to the changing geopolitical situation in the Middle East. The U.S. dollar strengthened against all key G10 currencies, while U.S. government bonds lost some ground.
Meanwhile, the MSCI Asia Pacific stock index rose by 0.1%, and Nasdaq 100 technology futures gained 0.2%. Gold held steady at around $4,540 per ounce, while Bitcoin triggered a surge in the cryptocurrency market.
A new flare-up of tensions threatens the prolonged global rally in stock markets, which has been sustained by the technology sector. The previous drop in oil prices had long shielded the global bond market from the pressure of energy inflation.
“There will still be disappointments, but the market has already priced in a future deal with Iran,” noted Patrick Lang, chief investment strategist at Geneva-based Global Gate Asset Management. “I don’t expect significant volatility, except perhaps for cheaper oil once the deal is actually announced.”
An additional factor putting pressure on the global economy was a noticeable slowdown in industrial production in the People’s Republic of China.
The official manufacturing Purchasing Managers’ Index (PMI) fell to a critical level of 50 points in May, down from 50.3 in April.
This indicates a complete halt in the sector’s growth, although the services and construction sectors showed a slight uptick to 50.1 points.
“China’s economic recovery is uneven,” notes BNY’s Asia-Pacific macro strategist Wei Kun Chong in a note to clients.
EU Considers Temporary Freeze on Russian Oil Price Cap — Bloomberg
Oil prices have plummeted amid a possible breakthrough in U.S.-Iran negotiations
The market expects oil prices to rise to $100 per barrel, — Bloomberg.
Global oil prices rose during trading on Thursday, May 21, partially offsetting the sharp drop of the previous day.
Russian oil is on the rise again, and this is shifting the balance of Russia’s revenues
