Besides questions about the place of Iran and the state of the Middle East after Israeli attacks on Lebanon and Iran’s retaliation against neighbouring countries, the energy market remains in turmoil after the essential closure of the Strait of Hormuz.
But Trump, who had on Friday (local time) declared on social media that only Iran’s “unconditional surrender” would end the hostilities, appears to be rethinking the situation, given the war’s unpopularity and its harmful impact on financial markets, according to Hogan.
Major US equity indices spent most of the day in the red, following a day of declines on European and Asian markets at the latest surge in oil prices.
After increasing by around 30% during Asian trading, international benchmark Brent and the main US oil contract WTI both pared gains and slid back under US$100 ($168) per barrel.
Brent finished up 6.8% at US$98.96 a barrel, while WTI gained 4.3% to US$94.77 a barrel.
Both contracts were later in negative territory in after-hours trading following Trump’s comments to CBS News.
Iranian retaliatory attacks have all but halted maritime traffic through the Strait of Hormuz, through which a fifth of global crude oil and liquefied natural gas pass.
All eyes will be on the Strait of Hormuz in the coming days.
“The surge higher for the price of oil is significantly increasing stagflation risks for the global economy and could trigger a deeper sell-off in global equity markets,” analyst Lee Hardman at the Mitsubishi UFG financial group said.
Stagflation refers to a period of high inflation coupled with economic stagnation.
Strait of Hormuz. Photo / Getty Images
Key figures at around 2140 GMT
Brent North Sea Crude: UP 6.8% at US$98.96 per barrel.
West Texas Intermediate: UP 4.3% at US$94.77 per barrel
New York – Dow: UP 0.5% at 47,740.80 (close)
New York – S&P 500: UP 0.8% at 6795.99 (close)
New York – Nasdaq Composite: UP 1.4% at 22,695.95 (close)
London – FTSE 100: DOWN 0.3% at 10,249.52 (close)
Paris – CAC 40: DOWN 1.0% at 7915.36 (close)
Frankfurt – DAX: DOWN 0.8% at 23,409.37 (close)
Seoul – Kospi: DOWN 6.0% at 5251.87 (close)
Tokyo – Nikkei 225: DOWN 5.2% at 52,728.72 (close)
Hong Kong – Hang Seng Index: DOWN 1.4% at 25,408.46 (close)
Shanghai – Composite: DOWN 0.7% at 4096.60 (close)
Euro/dollar: DOWN at $1.1614 from $1.1618 on Friday
Pound/dollar: UP at $1.3427 from $1.3413
Dollar/yen: UP at 157.85 yen from 157.78 yen
Euro/pound: DOWN at 86.49 pence from 86.62 pence
– Agence France-Presse