War premium returns to oil prices
Oil prices in international markets rose again with the escalating tensions between the US and Iran over the weekend. The price of Brent crude increased by about 0.9% as mutual attacks by Iran and the US weakened expectations of a return to normal ship traffic in the Strait of Hormuz.
Brent crude futures for August delivery traded at $73.21 per barrel as of 03:30 GMT on the first trading day of the week. That figure was 127 cents above the level a day before the US and Israel launched war against Iran on February 28.
Analyst's 'Reality Check' Comment
IG market analyst Fabien Yip in Sydney, Australia, told Al Jazeera that the partial recovery in Brent crude reflected a market that had become too optimistic about a ceasefire. Yip said oil had almost fully priced out the war premium despite a memorandum of understanding with no implementation details and ongoing attacks.
The analyst said Thursday's attack on a commercial ship was a reality check, and the weekend's mutual strikes reinforced that.
Mixed Performance in Asian Stock Markets
Asian stock markets opened the week on a mixed note. Japan's Nikkei 225 fell 0.7%, and South Korea's Kospi dropped 1.9%. Meanwhile, Hong Kong's Hang Seng Index rose 2.2% and Taiwan's Taiex gained 1.4%.
Japanese and South Korean stocks related to the artificial intelligence boom suffered the biggest losses. Japanese tech giant SoftBank Group lost about 5%, and semiconductor test equipment maker Advantest Corporation fell 3.7%. South Korean memory chip giants Samsung Electronics and SK Hynix dropped about 5% and 4%, respectively.
Mutual Attacks and Ceasefire Talks
The US Central Command announced that it carried out strikes against Iran on Friday and Saturday, citing Iran's attacks on two commercial ships in the Strait of Hormuz, through which about one-fifth of global oil and liquefied natural gas trade passes in peacetime. Iran responded to these strikes by launching a series of missiles and drones at US military assets in Bahrain and Kuwait.
Late Sunday, multiple news outlets, citing unnamed US officials, reported that Washington and Tehran had agreed to halt their attacks and resume negotiations to end the war. The Axios news site, citing a senior US official who spoke on condition of anonymity, reported that the parties would hold talks in the Qatari capital Doha on Tuesday. Iran has not yet commented on the reported ceasefire and planned talks.
US President Donald Trump and Iranian President Masoud Pezeshkian signed a memorandum of understanding on June 17 to end the war. However, the agreement has come under repeated pressure due to renewed hostilities and disagreements over the meaning of the text.
