Crude prices drop after US-Iran talks

Oil prices decreased on Monday due to optimism surrounding US-Iran negotiations, as mediators indicated a "roadmap" towards a conclusive agreement, while stock markets exhibited mixed results.

Following the cancellation of a meeting scheduled for Friday due to hostilities between Israel and Hezbollah, discussions finally commenced on Sunday in Switzerland, led by US Vice President JD Vance and Iran’s Mohammad Bagher Ghalibaf.

Traders maintained a positive outlook after reports emerged that the two adversaries had temporarily halted their conflict, which had previously driven energy prices up and heightened inflation, causing concern for the global economy.

Initial concerns arose after reports indicated that Iran had withdrawn from the talks in response to US President Donald Trump’s warning of further strikes if Hezbollah continued its assaults on Israel. However, mediators from Pakistan and Qatar reported that the discussions were conducted in "a positive and constructive atmosphere."

The sentiment improved as Qatar and Pakistan announced advancements in the negotiations, which seek to address Tehran’s nuclear program and reopen the Strait of Hormuz, a critical passage for approximately one-fifth of the world’s oil and gas supply.

The two mediators stated that the United States and Iran had agreed to establish a "communication line" to prevent incidents in the vital waterway, and that "the High Level Committee has agreed upon a roadmap towards reaching a final deal within 60 days, laying the groundwork for the immediate initiation of further technical discussions."

Iranian Foreign Minister Abbas Araghchi remarked on X that "mediation has achieved significant progress towards ending the Lebanon War."

Both primary oil contracts experienced declines during afternoon trading in Asia, with Brent crude falling by over one percent.

Stock markets displayed mixed performance following a generally positive opening.

Tokyo, Seoul, and Taipei saw gains driven by technology companies, while there were also increases in Shanghai, Mumbai, and Bangkok.

Conversely, markets in Hong Kong, Sydney, Singapore, Wellington, Manila, and Jakarta experienced declines.

London, Paris and Frankfurt opened higher.

“Following the positive response last week to reports of a US-Iran ceasefire, markets are likely to open with a cautious tone to start the new week as it remains clear that the situation in the Middle East remains fragile,” said National Australia Bank’s Skye Masters.

“The dollar is likely to remain supported, the oil price could swing either way, but at current levels the risk is for a lift higher.”

Sterling extended after suffering a sell-off following Thursday’s by-election win for UK Labour politician Andy Burnham, which ramped up expectations he will oust beleaguered Prime Minister Keir Starmer.

The embattled premier “is expected to announce on Monday that he will step down as prime minister after overwhelming pressure from Labour MPs to make way for Andy Burnham”, Britain’s Guardian newspaper said.

Investors were nervous that Burnham could introduce fresh spending plans that would add to the country’s already huge debt pile.

West Texas Intermediate: DOWN 0.6 per cent at $75.37 a barrel, Brent North Sea Crude: DOWN 1.7 per cent at $79.19 a barrel, Tokyo – Nikkei 225: UP 1.6 per cent at 72,353.96 (close).

Hong Kong – Hang Seng Index: DOWN 0.4 per cent at 23,822.25, Shanghai – Composite: UP 1.8 per cent at 4,163.10 (close)

Seoul – Kospi: UP 0.7 per cent at 9,114.55 (close), London – FTSE 100: UP 0.1 per cent at 10,368.72, Euro/dollar: DOWN at $1.1457 from $1.1464 on Friday.

Pound/dollar: DOWN at $1.3210 from $1.3218, Dollar/yen: UP at 161.72 yen from 161.27 yen, Euro/pound: DOWN at 86.72 pence from 86.73 pence.