Oil prices plunged, and stock markets rebounded after the United States President, Donald Trump, said the US and Iran had held talks over halting the conflict in the Middle East.
After the US president’s statement on Truth Social, the price of Brent crude sank initially, while European indexes rose.
Trump said the US and Iran spoke about a “COMPLETE” resolution and that he would postpone strikes against Iranian power plants for five days, but Iranian state-affiliated media said Tehran had not spoken to the US.
On Saturday, Trump said he would “obliterate” Iranian power plants if the key Strait of Hormuz shipping route was not reopened in 48 hours.
Iran had said it would respond by targeting key infrastructure in the region.
The comments over the weekend had rattled financial markets, adding to fears that the US-Israeli war with Iran would be a prolonged conflict.
Since the war began on February 28, Iran has effectively blocked the Strait of Hormuz, one of the world’s busiest oil shipping channels.
About 20% of the world’s oil and liquefied natural gas usually passes through the waterway, and the conflict has sent global fuel prices soaring.
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Earlier on Monday, the head of the International Energy Agency (IEA), Fatih Birol, had warned the war could see the world facing its worst energy crisis in decades.
Birol compared the current energy crisis to those of the 1970s and the impact of Russia’s 2022 invasion of Ukraine.
“This crisis as things stand is now two oil crises and one gas crash put all together,” he said, speaking at an event in Australia.
At one point on Monday, the price of Brent had hit $113 a barrel, but it tumbled in the immediate aftermath of Trump’s latest comments.
It fell to a low of $97.47 a barrel before rebounding to $104. Before the conflict began, it had stood at about $72.
While oil prices fell, stocks rose. London’s FTSE 100 index jumped initially to stand 0.5% higher, before slipping back to be down 0.3% on the day.
Germany’s DAX index was 1.5% higher, while France’s CAC was up 1%. Earlier, both had been down by about 2%.
Stocks in Asia, which closed before Trump’s latest comments, had seen heavy falls.
Japan’s Nikkei index closed down 3.5% while South Korea’s Kospi index sank 6.5%. Japan and South Korea have been particularly affected by the conflict, as they are heavily dependent on oil and gas that would normally pass through the strait.
