Oil Prices Surge as US Strikes Hinder Peace Deal Hopes
Investor optimism over a potential US-Iran peace deal dwindles amid new US strikes in the Middle East.
Oil prices rose on Tuesday as investor hopes for an imminent US-Iran peace deal were dampened by new US strikes in the Middle East.
The US forces conducted strikes in southern Iran, described as defensive action, while Tehran's top negotiator and foreign minister were in Doha for talks with Qatar's prime minister regarding a potential agreement with Washington to end the ongoing conflict.US Secretary of State Marco Rubio stated that negotiating a deal with Iran could 'take a few days', diminishing expectations for an immediate resolution to the three-month-old war.
As a result, Brent futures increased by over 2 percent in Asian trade to $98.21 per barrel.In contrast, US West Texas Intermediate crude was up slightly from Monday's last traded price but down 4.9 percent from Friday's close, with no settlement on Monday due to the US Memorial Day holiday.Investor sentiment remained mixed, with MSCI's broadest index of Asia-Pacific shares outside Japan advancing 0.67 percent and Nasdaq futures rising 0.86 percent.
However, EUROSTOXX 50 futures decreased by 0.16 percent, while FTSE and DAX futures added 0.2 percent and lost 0.26 percent, respectively.The market's desire for a swift resolution to the conflict persists, as prolongation of the war would negatively impact the global economy.
However, concerns surrounding Beijing's crackdown on illicit cross-border trading in Hong Kong contributed to a 0.5 percent increase in the Hang Seng Index, with China's CSI300 blue-chip index dipping 0.3 percent.The dollar experienced renewed safe-haven demand, remaining below its six-week peak hit last week.
The euro and sterling depreciated by 0.1 percent and 0.13 percent, respectively, while the dollar remained unchanged against the yen.Bonds stabilized after a recent rout due to concerns over prolonged higher energy prices potentially sparking inflation and prompting rate hikes in both developed and emerging markets.
The yield on the two-year US Treasury note fell nearly 7 basis points, and the 10-year yield decreased by more than 6 basis points.Eric Robertsen, Standard Chartered's head of global research and chief strategist, suggested that while geopolitical risks may lead to periodic yield retracements, inflation and fiscal risks are likely to be more sustained.
Furthermore, commodity supply dislocations will take months to resolve, and fiscal support measures may exacerbate sovereign balance sheet deterioration in an environment of higher funding costs.Elsewhere, spot gold decreased by 1 percent to $4,525.18 per ounce.
The US forces conducted strikes in southern Iran, described as defensive action, while Tehran's top negotiator and foreign minister were in Doha for talks with Qatar's prime minister regarding a potential agreement with Washington to end the ongoing conflict.US Secretary of State Marco Rubio stated that negotiating a deal with Iran could 'take a few days', diminishing expectations for an immediate resolution to the three-month-old war.
As a result, Brent futures increased by over 2 percent in Asian trade to $98.21 per barrel.In contrast, US West Texas Intermediate crude was up slightly from Monday's last traded price but down 4.9 percent from Friday's close, with no settlement on Monday due to the US Memorial Day holiday.Investor sentiment remained mixed, with MSCI's broadest index of Asia-Pacific shares outside Japan advancing 0.67 percent and Nasdaq futures rising 0.86 percent.
However, EUROSTOXX 50 futures decreased by 0.16 percent, while FTSE and DAX futures added 0.2 percent and lost 0.26 percent, respectively.The market's desire for a swift resolution to the conflict persists, as prolongation of the war would negatively impact the global economy.
However, concerns surrounding Beijing's crackdown on illicit cross-border trading in Hong Kong contributed to a 0.5 percent increase in the Hang Seng Index, with China's CSI300 blue-chip index dipping 0.3 percent.The dollar experienced renewed safe-haven demand, remaining below its six-week peak hit last week.
The euro and sterling depreciated by 0.1 percent and 0.13 percent, respectively, while the dollar remained unchanged against the yen.Bonds stabilized after a recent rout due to concerns over prolonged higher energy prices potentially sparking inflation and prompting rate hikes in both developed and emerging markets.
The yield on the two-year US Treasury note fell nearly 7 basis points, and the 10-year yield decreased by more than 6 basis points.Eric Robertsen, Standard Chartered's head of global research and chief strategist, suggested that while geopolitical risks may lead to periodic yield retracements, inflation and fiscal risks are likely to be more sustained.
Furthermore, commodity supply dislocations will take months to resolve, and fiscal support measures may exacerbate sovereign balance sheet deterioration in an environment of higher funding costs.Elsewhere, spot gold decreased by 1 percent to $4,525.18 per ounce.
