Di global market don see sharp movement today as US President Donald Trump announce say dem postpone military action against Iran for five days. Trump yarn for social media say US and Iran don begin “very good and productive conversations” wey dey aim to end di war for Middle East. Dis news make oil price fall sharp-sharp and stock market bounce back.
Brent crude oil, wey be global benchmark, fall more than 7% reach around $104 per barrel. For one point, e even fall reach 13%. WTI crude, wey be US benchmark, also slide 6.9% reach $91.4 per barrel. Dis na big change from earlier today when oil price dey above $114 per barrel for Brent and around $100 for WTI. Even with dis fall, oil price still dey about one-third higher than before US and Israel attack Iran for February 28.
For stock market side, S&P 500 and Nasdaq futures initially jump about 3% after Trump announcement. Dow Jones Industrial Average futures rise as much as 1,300 points. Even though some of dis gains reduce after Iranian media deny say talks dey happen, market still maintain strong performance. Dow Jones eventually close up 782 points or 1.72%, S&P 500 rise 1.5%, and Nasdaq gain 1.68%.
Trump announcement come just two days after im threaten say US go “obliterate” Iran power plants if dem no open Strait of Hormuz by Monday evening. Di strait na vital waterway wey carry about 20% of global oil supply, and Iran don dey block am since di war begin. Iranian Islamic Revolutionary Guard Corps respond say if US strike their electricity, dem go strike back and keep di strait closed indefinitely.
Iranian foreign ministry deny say any dialogue dey happen with Washington. Dem yarn say Trump claims na just attempt to lower energy prices and buy time. Iranian Parliamentary Speaker Mohammed Baqer Qalibaf write for X say if Trump make good im threat, critical infrastructure and oil facilities for Middle East go become “legitimate targets” wey dem go destroy.
Di International Energy Agency warn say di reduction of global oil supply from di closure of Strait of Hormuz don pass di loss wey happen during di oil shocks of 1970s. IEA executive director Fatih Birol tell National Press Club of Australia say di energy shock from dis war worse than di 1973 and 1979 oil crises. Birol add say di loss of natural gas supply don pass di 2022 energy crisis wey link to Russia invasion of Ukraine.
Birol yarn say at least 44 energy assets for di region don suffer severe damage across nine countries. IEA member countries don already agree to release record 400 million barrels of oil from strategic stockpiles to ease global supply crunch. Birol say if need be, dem fit release more oil to help reduce di pain for economy.
For European market, stocks rise and reverse earlier losses. Di benchmark Stoxx 600 index rise 1.4% while Germany DAX index soar 2%. US natural gas prices drop 4%, European natural gas futures slide 9%, and heating oil prices drop 3%. Diesel futures fall 5.7% and gasoline futures fall 6.8%, even though both still dey up about 80% for dis year.
For US, gas prices don rise for 23 straight days, reach $3.96 per gallon according to AAA. Dis na di highest price since August 2022. Di average price don rise $1.02 or 34% for di last month. Dis one-month gain bigger than di one wey happen after Hurricane Katrina for 2005 and Russian invasion of Ukraine for 2022.
UBS economist Paul Donovan yarn say investors get two related problems for pricing risks around di Gulf war. Donovan talk say statements from top US administration officials give different and sometimes contradictory assessments of di war. Since no measurable objectives dey, dis na all markets get to respond to, and di result na volatility.
Chris Larkin, managing director for trading and investing at E-Trade from Morgan Stanley, note say market wake up to some potentially good news from Middle East. But im add say follow-through on any relief rally go likely require tangible follow-through on di geopolitical front. Larkin yarn say “We’re still living in a headline-driven market, and with a light economic calendar this week, the focus will remain oil prices and politics.”
Di Trump administration temporarily lift sanctions on Iranian oil at sea for Friday, allow di sale of 140 million barrels of oil wey dey for tankers. According to US Energy Information Administration, dis na enough to satisfy global demand for roughly one day and half.
As di war enter im fourth week, market dey watch closely to see if di talks wey Trump mention go yield concrete results. Di closure of Strait of Hormuz continue to affect global energy supply, and any lasting solution must address dis critical issue. Investors dey hope say di temporary calm go lead to permanent resolution, but many still dey cautious as contradictory statements from both sides continue to create uncertainty.
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