The price of oil has dipped and Asian stock markets moved higher after reports that Donald Trump has sent a 15-point framework for peace to Iran, amid hopes of a ceasefire in the Middle East.
Oil prices had fallen by 4% in the early hours of Wednesday, with brent crude futures sinking below $100 a barrel and even moving as low as $97.57 as trading was influenced by the prospect of an end to the conflict easing the squeeze on oil supply.
Stock markets in Asia also moved higher in morning trading. Japan’s Nikkei rose by 2.9%, while the S&P BSE Sensex in India was almost 2% higher and Hong Kong’s Hang Seng was just under 1% up.
European markets also rose in early trading. The FTSE 100 in London was up by almost 1%, while Germany’s Dax was trading 1.8% higher and France’s Cac 40 climbed by 1.5%.
However, oil prices later started to climb again amid mixed signals about the status of negotiations between the US and Iran, after Tehran denied that any talks had taken place since the start of the bombing campaign.
Iran’s effective closure of the strait of Hormuz, located at its southern border, has all but halted global shipments of oil and gas through the key shipping channel, sparking what the International Energy Agency has called the largest ever disruption to oil supply.
More than 30 countries including the United Arab Emirates, the UK, France, Germany, Canada and Australia have signed a joint statement agreeing to work on “appropriate efforts” to safeguard the waterway.
Volatility in global markets since the outbreak of conflict in the Middle East has also affected the gold price, traditionally seen as a safe haven asset during troubled times.
The precious metal has had a historic run in recent months, even moving above $5,000 an ounce for the first time in January, as investors flocked to the asset in response to geopolitical tensions.
Despite holding steady during the first days of the Iran conflict, gold has since fallen by about 13% to about $4,460 since the US and Israel began their bombing campaign, calling into question the metal’s traditional role as a financial safety net.
It came as the boss of the world’s largest asset manager said a prolonged conflict in the Middle East could lead to a rise in oil prices to $150 a barrel that would trigger a global recession.
Larry Fink, the chief executive of BlackRock, which controls assets worth $14tn (£10.4tn), told the BBC that if Iran “remains a threat” and oil prices remain elevated there would be “profound implications” for the global economy.
Fink said he could envision two scenarios – one where the conflict ends and Iran is accepted by the international community, which would allow the price of oil return to levels seen before the war. In the other scenario, Fink said there could be “years of above $100, closer to $150 oil, which has profound implications in the economy”, which would result in “a probably stark and steep recession”.
