Crude prices rebound to triple digits following latest American airstrikes on Iranian targets

Oil prices surged back to $100 on Tuesday, driven by concerns over the reopening of the Strait of Hormuz, after US military strikes on Iran dampened hopes of an imminent deal, while stock markets delivered a mixed performance and the dollar strengthened.

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The United States and Iran have been engaged in negotiations to end the Middle East war and reopen the crucial waterway to tanker and cargo traffic since a fragile ceasefire took hold on April 8.

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Tehran has warned that it is prepared to retaliate against the US, accusing Washington of breaching their truce with what US Central Command described as “self-defence strikes”, following the fresh US military strikes on Iran.

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Stock markets had rallied on Monday, with crude futures dropping below $100 a barrel, after reports emerged that a deal to reopen the Strait of Hormuz might be imminent, but this optimism was short-lived.

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The US forces' attack on missile sites in southern Iran and boats attempting to lay mines led to a significant increase in oil prices, with Brent North Sea crude, the international benchmark, jumping almost 4.5 percent on Tuesday to edge back above $100 a barrel.

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According to Arne Lohmann Rasmussen, a commodities analyst at Global Risk Management, the modest oil price increases prior to the US strikes “underlined the market’s strong belief that the Strait of Hormuz will reopen”.

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Equity markets were mixed, with the Dow marginally lower, while the tech-heavy Nasdaq and the S&P 500 were in positive territory two hours into trading.

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In Europe, the Frankfurt and Paris markets closed around one percent lower, while London ended just 0.2 percent ahead as traders returned from a long holiday weekend in Britain.

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British oil giant BP was the biggest loser, with its stock price plummeting more than four percent after the company unexpectedly removed Albert Manifold as chairman, citing “serious concerns” about governance standards, oversight, and conduct.

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Kathleen Brooks, research director at XTB, warned that Manifold’s departure, which comes barely three years after former CEO Bernard Looney was replaced over allegations of misconduct, “suggests a lack of stability at the firm, which is bad news for shareholders”.

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AJ Bell investment director Russ Mould noted that “continued doubts about the potential for a deal and an overnight pre-emptive US strike on Iran mean any euphoria is being kept in check,” a sentiment echoed by Brooks.

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The US strikes coincided with the arrival of top Iranian negotiators in Doha for another round of talks to end three months of conflict, as well as an escalation of hostilities between the Israeli military and Iran-backed Hezbollah in southern Lebanon.

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In Asia, Seoul’s stock market reached a new record high above 8,000 points, driven by the strong performance of chipmakers, carmakers, and shipbuilders.

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Investors in Europe expressed disappointment at Ferrari’s unveiling of its first electric model, with shares in the Italian luxury carmaker plummeting six percent.

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Key figures at around 1550 GMT included Brent North Sea Crude, which was up 4.4 percent at $100.41 a barrel, while the Dow was down 0.2 percent at 50,467.08 points, and the S&P 500 was up 0.5 percent at 7,508.30.

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The Nasdaq was up 0.9 percent at 26,570.41, the FTSE 100 was up 0.2 percent at 10,491.39, and the CAC 40 was down 1.0 percent at 8,173.11.

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The DAX was down 0.8 percent at 25,184.89, the Hang Seng Index was flat at 25,599.45, and the Nikkei 225 was down 0.3 percent at 64,996.09 points.

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The Shanghai Composite was down 0.2 percent at 4,145.37, the euro/dollar was down at 1.1620 from 1.1646 on Monday, and the pound/dollar was down at 1.3439 from $1.3502.

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The dollar/yen was up at 159.36 from 158.90 yen, and the euro/pound was up at 86.47 from 86.25 pence.