Global Oil Prices Climb As Mideast Tensions Escalate

NEW YORK: Oil prices rose on Monday as the Middle East tensions appear to drag on for longer after President Donald Trump once again rejected Iran’s latest proposal to end the conflict.

The price for a barrel of Brent crude oil rose 1.7 percent to above $103. The rejection keeps the two sides in an uneasy limbo, one that has already driven the price of Brent up from roughly $70 per barrel before the war. But the S&P 500 slipped just 0.1 percent from its record. The Dow fell 0.1 percent, and the Nasdaq composite sank 0.2 percent.

Benchmark US crude was $2.55 higher at $98 a barrel. With the Strait of Hormuz, a crucial waterway for global oil and gas transport, still largely closed and as the US is continuing its sea blockade of Iranian ports, analysts believe oil prices are likely to remain higher for longer.

With corporate earnings season winding down this week, rising energy prices and new US inflation data will dominate the stage, along with a high-stakes summit between Trump and Chinese President Xi Jinping.

The Iran war will certainly be an important piece of the agenda during the Trump-Xi meeting. China has close economic links with Iran and the US has been pressing Beijing to leverage its influence to help reopen the Strait of Hormuz.

“There remains a glimmer of hope that talks between Trump and Xi later this week could yield positive results on Iran,” ING commodities analysts Warren Patterson and Ewa Manthey wrote on Monday.

“The hope is that China can use its influence over Iran to push it closer toward a peace deal,” they said. “Clearly, this is easier said than done.” The oil market is still very much “heavily headline-driven,” the pair added.

At midday in Europe, Britain’’s FTSE 100 was unchanged, while Germany’s DAX fell 0.2 percent and France’s CAC 40 lost 1.1 percent. In Asia, Tokyo’s Nikkei 225 fell 0.5 percent to 62,417.88 after briefly reaching another record high in intraday trading at above 63,300. 

Technology-focused investment holding company SoftBank Group, one of Japan’s largest stocks, fell more than 6 percent. South Korea’s Kospi gained 4.3 percent to 7,822.24. It also hit an all-time intraday high, led by gains from tech-related stocks including Samsung Electronics and memory chip maker 

SK Hynix. Technology-related stocks and growing artificial intelligence-related interest have supported markets in Japan and South Korea despite the Iran war, with the Nikkei 225 and Kospi rising more than 10 percent and 30 percent, respectively, over the past month.

Hong Kong’s Hang Seng edged up less than 0.1 percent to 26,406.84. The Shanghai Composite index climbed 1.1 percent to 4,225.02.

Australia’s S&P/ASX 200 lost 0.5 percent. Taiwan’s Taiex traded 0.5 percent higher, and India’s Sensex fell 1.7 percent.