Oil Prices Drop as Geopolitical Tensions Ease
Oil prices took a hit on Friday as concerns over escalating tensions in Iran seemed to diminish, leading to gains in US and European stock markets.
The international crude benchmark, Brent, saw a decline of over two per cent, impacting the share prices of major energy companies. This drop followed US President Donald Trump’s statement that he would make a decision on joining Israel’s strikes on Iran within the next two weeks.
Traders interpreted Trump’s comments as a sign of a preference for diplomatic negotiations to resolve the conflict. This sentiment was reinforced as top European diplomats engaged in discussions with Iranian Foreign Minister Abbas Araghchi in Geneva to seek a peaceful solution.
US indices opened slightly higher on Friday, with low trading volumes expected due to a four-day weekend for many traders following the Juneteenth holiday. European stock markets experienced gains during afternoon trading, while Asian equities closed the week with mixed results.
Kathleen Brooks, an analyst at XTB, noted that the news of Trump delaying a decision on joining Israel’s attacks against Iran had a positive impact on market sentiment. She mentioned that Brent crude prices dropped as traders reassessed the geopolitical risks.
Despite the immediate relief in the markets, investment analyst Dan Coatsworth of AJ Bell cautioned that the issue of US intervention in Iran remains unresolved and will likely continue to be a concern in the coming weeks.
David Sekera, Morningstar’s chief US market strategist, highlighted the significance of the ongoing trade war and the approaching deadline for a 90-day pause on tariffs imposed by Trump. He suggested that market reactions could be influenced by developments in trade negotiations.
Meanwhile, in Europe, Eutelsat shares surged by 27 per cent on the Paris stock exchange following the French government’s announcement of a 1.35 billion euro investment in the European satellite operator. French President Emmanuel Macron emphasized the need for Europe to enhance its competitiveness in the space sector amid growing competition from the US.
Key Figures at Around 1340 GMT:
- Brent North Sea Crude: DOWN 3.1 per cent at $76.41 per barrel
- West Texas Intermediate: DOWN 0.3 per cent at $73.32 per barrel
- New York – Dow: UP 0.3 per cent at 42,295.17 points
- New York – S&P 500: UP 0.4 per cent at 6,002.28
- New York – Nasdaq: UP 0.6 per cent at 19,656.24
- London – FTSE 100: UP 0.2 per cent at 8,804.94
- Paris – CAC 40: UP 0.8 per cent at 7,614.83
- Frankfurt – DAX: UP 1.3 per cent at 23,359.19
- Tokyo – Nikkei 225: DOWN 0.2 per cent at 38,403.23 (close)
- Hong Kong – Hang Seng Index: UP 1.3 per cent at 23,530.48 (close)
- Shanghai – Composite: DOWN 0.1 per cent at 3,359.90 (close)
- Euro/dollar: UP at $1.1517 from $1.1463 on Thursday
- Pound/dollar: UP at $1.3495 from $1.3429
- Dollar/yen: UP at 145.68 yen from 145.63 yen
- Euro/pound: DOWN at 85.33 pence from 85.36 pence
