Oil nears four-year peaks before Trump's Iran deadline expires

Prices for oil benchmark Mark on April 7 rose to the maximum closing values since June 2022 in anticipation of the deadline set by U.S. President Donald Trump to make peace with Iran, according to Trading Economics. The stock markets are showing mixed dynamics: the prospect of escalation of the conflict in the Middle East prompted investors to take a wait-and-see attitude, according to Reuters.

The cost of June futures for oil Mark Brent in the morning on Tuesday, April 7, rose above $111 per barrel, and May contracts for North American WTI exceeded $116. The maximum growth of oil quotations during morning trading was 1.8% and 3.7%, respectively.

Increased geopolitical uncertainty deprived global stock markets of a single vector of movement. Composite index of shares of Asia-Pacific region excluding Japan from MSCI rose by 0.7%. Local support for sentiment in Asia was provided by a record forecast of the largest company in South Korea Samsung Electronics on quarterly profits. At the same time, Japan's Nikkei 225 index lost its initial growth and went down by 0.3%.

Futures on the U.S. stock index S&P 500 slipped 0.4%, while European derivatives indicate a high probability of a positive opening of stock exchanges in Europe after a four-day weekend, writes Reuters.

Market participants are pricing in the risks of escalation in the Middle East after Trump set a deadline for Tehran to reach a peace deal at 8:00 p.m. April 7 North American Eastern Time (5:00 a.m. April 8 Astana time). On April 6, the U.S. president threatened that Iran could be "destroyed" if it did not meet his deadline and promised to destroy Iranian power plants and bridges.

In turn, the Iranian authorities promised to respond to the U.S. strikes on civilian infrastructure by bombing energy facilities of U.S. allies in the Persian Gulf. In addition, the Iranian Foreign Ministry rejected the draft truce proposed by Washington through Pakistani mediators, insisting on the final cessation of hostilities and the complete lifting of sanctions on Iran as mandatory conditions of the peace agreement.

"Any enforcement of threats to strike Iran's energy infrastructure would mean a significant escalation, increasing the risk of retaliation that could further disrupt energy facilities in the Persian Gulf," said Vasu Menon, managing director of investment strategy at OCBC in Singapore (quoted by Reuters).

The protracted Middle East conflict and the shutdown of transit in the Strait of Hormuz have heightened fears of global stagflation - a combination of high inflation and weak economic growth. Changing macroeconomic expectations have led to a reassessment of the prospects for monetary policy: according to CME Group, Wall Street no longer believes in an interest rate cut by the US Federal Reserve (Fed) this year.

"We are back to a Trump-imposed countdown clock, and there is no way to predict with certainty what will happen. The more adventurous traders may bet one way or the other. Others will seek to hedge risk or stay on the sidelines entirely. But market participants really have no choice but to wait and see," summarized Kyle Rodda, senior market analyst at Capital.com (quoted by Reuters).

This article was AI-translated and verified by a human editor