Washington, DC – Oil prices rose 1% on Tuesday, attempting to recover some of the sharp losses suffered in the previous session. However, uncertainty persisted regarding the prospects for a diplomatic resolution to the crisis between Washington and Tehran. Moreover, the price increase was also driven by ongoing geopolitical concerns about potential supply disruptions in the Middle East. These concerns include fears of a possible closure of the Strait of Hormuz.
Brent crude futures rose 1.3% to $84.89 a barrel, recovering from a sharp 7% plunge on Monday that hit a three-week low. Meanwhile, U.S. West Texas Intermediate crude futures climbed 1% to $81.11 a barrel.
Conflicting political statements and a murky situation
The sharp market volatility followed statements by US President Donald Trump, who claimed he had halted any new military strikes pending what he described as ongoing talks. However, these claims were categorically denied by Iranian Foreign Ministry spokesman Esmail Baghaei, who asserted that no talks were taking place with the US and no meetings were planned. Commenting on the market movements, analysts at ING Bank noted that the previous sell-off appeared “somewhat excessive” given the high levels of uncertainty. Additionally, they added, “We’ve been through this many times before, and then everything suddenly collapsed.”
Global market performance and the dollar
In other financial markets, the broader MSCI index of Asia-Pacific shares outside Japan edged up slightly by 0.1%. South Korean stocks led the gains, rising 2.1%. In contrast, Japan’s Nikkei index slipped 0.3%.
Global markets drew some support and confidence from the release of US macroeconomic data, which showed industrial production growing to its highest level in over four years during July. This growth propelled the Dow Jones Industrial Average to a new record high. In the currency markets, the dollar index rose by three-tenths of a percent against the Japanese yen. It climbed after joint intervention by the US and Japan.
