Oil drops further on hopes US-Iran talks on track

LONDON: Oil prices tumbled Wednesday as investors tracked signs that the US and Iran were closing in on a deal that would open up the Strait of Hormuz to Gulf crude shipments and avoid a resumption of the Mideast war.

Both Brent crude futures, the international benchmark, and the US West Texas Intermediate contract were down around 4%.

Stock markets were mixed, with Wall Street opening higher before retreating after strong tech-led gains on Tuesday, while European indexes were broadly higher.

“The hope will be that this is finally the week when a real breakthrough is achieved, but should negotiations fail then we could see market patience wear thin,” said AJ Bell investment director Russ Mould.

He cautioned, however, that “Even if an agreement is reached, it will take time to get energy infrastructure fully back online and shipments flowing through the Strait of Hormuz at anywhere near pre-war levels.”

Investors appeared willing to see market glass half-full, buoyed also by another surge for tech stocks on expectations the AI rollout will continue to propel earnings in the sector.

In Asia, South Korean chipmaker SK hynix jumped 11% to hit a US$1-trillion market capitalisation, placing it alongside regional tech heavyweights Samsung Electronics and TSMC.

The gains followed a strong session on Wall Street, where the S&P 500 and Nasdaq notched fresh record highs on Wednesday as US chipmaker Micron piled on nearly 20% to also hit a US$1-trillion market cap.

“The tech boom is back,” said Kathleen Brooks, research director at trading group XTB.

The Middle East war, which began in late February, has effectively halted tanker and cargo traffic in the Hormuz strait, a vital oil and gas trading corridor, driving up energy prices and stoking global inflation.

Iran’s Revolutionary Guards said Wednesday that a return to war with the US was unlikely, despite new US airstrikes on Iranian targets even though a ceasefire is in place.

“The restoration of internet services by the Iranian authorities on Tuesday after a three-month shutdown was also taken as a positive sign that tensions were easing,” investors said.

المصدر: Free Malaysia Today