Oil prices remained steady near four-year highs on Thursday, with stock markets experiencing declines following Donald Trump’s warning that the U.S. blockade of Iranian ports might extend for several months due to stalled peace negotiations.
Despite Tehran presenting a new proposal this week to reopen the vital Strait of Hormuz, President Trump expressed skepticism about Iran’s sincerity in negotiations. According to The Wall Street Journal, Trump instructed national security officials to prepare for a prolonged blockade to pressure Iran into abandoning its nuclear program.
During a meeting with oil executives on Tuesday, Trump discussed strategies to manage global oil markets and sustain the ongoing blockade for an extended period while minimizing the impact on American consumers, as disclosed by a White House official speaking on anonymity.
Trump emphasized to Axios that the blockade was proving more effective than military strikes and vowed to maintain the naval action until a satisfactory deal addressing Iran’s nuclear ambitions was reached. In a post on his Truth Social platform, Trump criticized Iran’s inability to finalize a nonnuclear agreement, urging them to act promptly.
The uncertainty surrounding the potential long-term closure of the Strait of Hormuz, a critical passage for a significant portion of global oil and gas shipments, led to a surge in crude oil prices to their highest levels since 2022 after the conflict in Ukraine.
Brent crude for June delivery, which peaked at $122.53 on Wednesday, hovered around $120 in Asian trading, while West Texas Intermediate stood at approximately $108. Analysts noted a shift in market sentiment, with expectations growing that the crisis could persist longer than initially anticipated.
In the tech sector, stock markets faced challenges, with major indices in Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Manila, and Jakarta recording losses. However, markets in Singapore, Wellington, and Taipei saw gains. The U.S. dollar, considered a safe-haven asset during times of turmoil, strengthened against other currencies.
Despite market volatility, optimism persisted among equity traders due to a resurgence in the artificial intelligence (AI) sector, contributing to record levels for South Korea’s Kospi index. Samsung Electronics reported a remarkable 750% surge in operating profit, driven by robust sales of AI-related chips, with positive forecasts for future demand.
The positive trend in the tech industry was further supported by impressive earnings reports from tech giants such as Microsoft, Meta, and Alphabet, boosting U.S. stock futures. However, some analysts cautioned about the potential risks associated with the widening gap between stock performance, oil prices, and interest rates, highlighting the potential impact on the broader economy.
Investors also monitored the Federal Reserve’s policy decisions following dissent among members during a recent vote, the largest dissent since 1992. While interest rates were maintained due to concerns over inflation stemming from rising energy costs, several members expressed reservations about indicating a bias towards easing monetary policy.
The recent Fed meeting marked Jerome Powell’s final term as Chair, with Kevin Warsh set to assume the role next month following his nomination by President Trump. Trump had frequently criticized Powell during his presidency for not implementing interest rate cuts swiftly.
Key figures at 0300 GMT:
– West Texas Intermediate: Up 1.9% at $108.92 per barrel
– Brent North Sea Crude: Up 2.9% at $121.48 per barrel
– Tokyo – Nikkei 225: Down 1.0% at 59,304.62
– Hong Kong – Hang Seng Index: Down 1.3% at 25,763.07
– Shanghai – Composite: Down 0.1% at 4,104.67
– Euro/dollar: Down at $1.1668 from $1.1695 on Wednesday
– Pound/dollar: Down at $1.3476 from $1.3489
– Dollar/yen: Up at 160.34 yen from 160.23 yen
– Euro/pound: Down at 86.58 pence from 86.71 pence
– New York – Dow: Down 0.6% at 48,861.81
– London – FTSE 100: Down 1.2% at 10,213.11
