Oil falls on US-Iran progress; pound holds up as Starmer resigns

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Oil money

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Oil prices fell Monday on optimism over talks by the US and Iran after mediators flagged a “roadmap” to a final agreement, while major stock markets traded mixed.

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The British pound and the London stock market firmed, and the UK’s benchmark 10-year bond dipped, after Britain’s embattled Prime Minister Keir Starmer announced his widely expected resignation, with the country appearing set for an orderly transition to a new leader.

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Internationally, the main focus remained firmly on the Middle East and the prospects for a reopening of the Strait of Hormuz to tanker and cargo traffic.

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Iran’s senior envoys left talks in Switzerland on Monday after a marathon negotiating session with the United States, state media reported, as mediators claimed progress towards a definitive US-Iran deal end the war in the Gulf.

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“The latest developments out of the Middle East have turned more constructive,” said Deutsche Bank analyst Jim Reid, adding that a pickup in oil flows through the Strait of Hormuz was “helping to calm markets”.

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Switzerland said conditions were set for further US-Iran talks that aim to secure a long-term settlement within 60 days.

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Last week, Tehran and Washington signed a memorandum of understanding laying the groundwork for the negotiations, after a 40-day war that was followed by weeks of an inconclusive and oft-breached ceasefire.

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The negotiators aim to tackle some of the most intractable issues that have dogged US-Iranian relations for decades, including Tehran’s nuclear programme and enriched uranium.

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– UK shakeup –

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In Britain, Starmer’s departure could mean a change of finance minister and increased public spending, a prospect that has alarmed investors concerned about the country’s debt levels.

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Rachel Reeves has been finance minister since Labour returned to power nearly two years ago, having overseen some controversial choices regarding state spending and taxes that contributed to Starmer’s demise.

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Veteran Labour politician Andy Burnham, who secured a return to parliament just last week, appeared poised to succeed Starmer after a would-be rival, Wes Streeting, offered him his support.

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Starmer will remain prime minister until late this year when labour elects a new leader, who would become the country’s seventh prime minister in a decade.

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“The pound has taken the news in stride, although Burnham’s preference for fiscal expansion, higher taxes and greater gilt issuance is a concern,” said Enrique Diaz-Alvarez, chief economist at the financial services firm Ebury.

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“The critical question is who becomes chancellor” of the exchequer.,” he said.

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“Continuity with Reeves would be the market’s preferred outcome, but any indication that a new chancellor intends to loosen or abandon the existing fiscal rules could trigger fresh selling in UK assets.”

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– Key figures around 1100 GMT –

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Brent North Sea Crude: DOWN 1.6 percent at $79.28 a barrel

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West Texas Intermediate: DOWN 0.7 percent at $75.35 a barrel

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London – FTSE 100: UP 0.2 percent at 10,386.20 points

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Paris – CAC 40: DOWN 0.7 percent at 8,358.87

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Frankfurt – DAX: DOWN 0.3 percent at 24,918.67

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Tokyo – Nikkei 225: UP 1.6 percent at 72,353.96 (close)

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Hong Kong – Hang Seng Index: DOWN 0.7 percent at 23,768.52 (close)

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Shanghai – Composite: UP 1.8 percent at 4,163.10 (close)

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Seoul – Kospi: UP 0.7 percent at 9,114.55 (close)

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Pound/dollar: UP at $1.3240 from $1.3218

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Euro/dollar: DOWN at $1.1461 from $1.1464 on Friday

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Dollar/yen: UP at 161.72 yen from 161.27 yen

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Euro/pound: DOWN at 86.55 pence from 86.73 pence

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