- Oil prices drop sharply but remain above pre-war levels
- Global stock markets surge on hopes of stability
- Asia still faces pressure from disrupted energy supplies
Global oil prices fell sharply and stock markets rallied after the US and Iran moved towards a conditional two-week ceasefire, easing immediate fears around energy supply disruptions. The agreement includes reopening the Strait of Hormuz, a critical shipping route that carries a large share of the world’s oil.
Brent crude dropped by around 13 per cent to £70.73 ($94.80) a barrel, while US-traded oil slipped more than 15 per cent to roughly £71.45 ($95.75). Even with this fall, prices are still significantly higher than the roughly £52 ($70) levels seen before the conflict began on February 28. The recent spike had been driven by fears of supply cuts after Iran threatened vessels passing through the strait in response to US and Israeli airstrikes.
Stock markets responded quickly. London’s FTSE 100 rose 2.53 per cent at the open, while France’s CAC climbed 4 per cent and Germany’s DAX gained nearly 5 per cent. Asian markets followed suit, with Japan’s Nikkei 225 up 5 per cent and South Korea’s Kospi rising close to 6 per cent. Hong Kong and Australia also posted solid gains. Futures suggested a similar positive start for Wall Street.
A pause, not a resolution
The agreement itself appears cautious rather than conclusive. Donald Trump said in a social media post that he would suspend military action for two weeks, provided Iran ensured the “complete, immediate, and safe opening” of the Strait of Hormuz. Iran’s foreign minister Abbas Araghchi signalled willingness to cooperate, stating that safe passage would be possible if attacks on Iran stopped, as quoted in a news report.
Market analysts suggest this may be less about diplomacy and more about economic pressure. Escalating the conflict further could have pushed energy prices even higher, risking what Xavier Smith of AlphaSense described as a “self-inflicted economic wound”, reportedly said in a news report. With political and economic stakes rising, neither side appears eager to trigger a deeper crisis.
There are already signs of movement. Some oil tankers that had been stranded near the strait are beginning to pass through. Countries including India, Malaysia and the Philippines have negotiated safe transit for their ships, while China has confirmed several crossings since the conflict began. A Malta-flagged vessel operated by CMA CGM and a Japanese gas carrier have also successfully navigated the route.
Relief for markets, strain for Asia
Even so, the bigger picture remains uncertain. Analysts warn that energy production in the region will not bounce back quickly. Saul Kavonic of MST Marquee noted that a lasting recovery depends on confidence in a stable peace deal, reportedly said in a news report.
The damage to infrastructure is significant. Iran’s retaliatory strikes have hit energy and industrial facilities across the region, with repair costs estimated at over £19.8bn ($25bn). In Qatar, attacks on the Ras Laffan industrial hub — responsible for about a fifth of global liquefied natural gas — have cut export capacity by 17 per cent. Repairs there could take up to five years.
Asia continues to feel the brunt of the disruption. Many countries in the region rely heavily on Middle Eastern energy imports. The Philippines, which sources 98 per cent of its oil from the region, declared a national energy emergency on March 24 after fuel prices surged. Airlines have raised fares and reduced flights as jet fuel costs climbed, while several developing economies struggle with limited reserves and refining capacity.
Ichiro Kutani from Japan’s Institute of Energy Economics said the ceasefire offers some breathing room but not a full reset. Oil prices could stabilise if the truce holds, though a return to earlier levels may take time, reportedly said in a news report.
For now, markets are reacting to the immediate easing of tensions. But the underlying risks — damaged infrastructure, fragile diplomacy and heavy dependence on Gulf energy — are still very much in play.
