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Brent crude recovers after Monday plunge
Oil prices surged 4% on Tuesday, pushing Brent crude back above $100 a barrel, following conflicting reports about potential negotiations between the United States and Iran.
The benchmark briefly reached $104 (£77.57) before settling near $102, reversing a steep 10% drop the previous day when U.S. President Donald Trump postponed threatened military strikes on Iranian infrastructure.
Trump delays strikes, markets react
On Monday, Trump announced he had called off planned attacks on Iranian power plants, citing "productive" discussions with Tehran aimed at a "COMPLETE AND TOTAL" resolution. The move triggered a sharp rebound in global stock markets and a sell-off in oil, which had spiked to $113 a barrel over the weekend.
Iran swiftly denied any contact with Washington, dismissing the claims as an attempt to manipulate energy markets.
Strait of Hormuz tensions drive volatility
The recent turbulence stems from escalating tensions over the Strait of Hormuz, a critical chokepoint for global oil shipments. On Saturday, Trump warned Iran he would "obliterate" its power plants if the waterway-currently blocked by Tehran-was not reopened within 48 hours. Iran vowed to retaliate by targeting regional infrastructure.
Since the U.S. and Israel launched strikes on Iran on 28 February, the strait has remained effectively closed. Roughly 20% of the world's oil and liquefied natural gas typically transits the route, exacerbating supply fears and driving fuel prices higher.
Global markets show mixed response
Asian markets, heavily reliant on Middle Eastern energy imports, stabilized on Tuesday after sharp losses the previous day. Japan's Nikkei 225 rose 0.8%, Hong Kong's Hang Seng gained 1.6%, and South Korea's Kospi climbed 2.2%.
In Europe, reactions were subdued. The UK's FTSE 100 dipped 0.3%, while Germany's Dax fell 0.9% in early trading.
Governments act to mitigate energy shocks
Nations are scrambling to offset the impact of soaring fuel costs and supply disruptions. The U.S. has temporarily waived sanctions on Russian and Iranian oil already in transit to ease shortages.
China, meanwhile, scaled back planned fuel price increases on Tuesday to "reduce the burden" on consumers amid the energy crisis.
Outlook remains uncertain
Analysts warn that further volatility is likely as long as the conflict persists. The Strait of Hormuz remains a flashpoint, with both sides trading threats and global energy supplies hanging in the balance.
