Oil Markets Stabilise as Iran Israel Tensions Show Signs of Easing

Oil prices retreated and global equities advanced as market sentiment shifted towards optimism regarding the Iran-Israel conflict, with traders increasingly confident the situation would not develop into a broader regional war.

The price of Brent crude declined nearly 4 per cent to $71.47 per barrel, marking a significant reversal from Friday’s peak of $78. The stabilisation comes amid reports of Iran pursuing diplomatic solutions and evidence suggesting global oil supplies remain uninterrupted.

Market concerns had initially centred on potential disruptions to Iranian output and possible closure of the strategically vital Strait of Hormuz, through which approximately one-fifth of global oil supplies transit. These fears have largely subsided as production and transportation networks continue to operate normally.

Gold prices, traditionally viewed as a safe-haven asset, experienced a modest decline of 1 per cent, settling at $3,402 per ounce. The FTSE 100 demonstrated resilience, approaching record levels before closing 0.28 per cent higher at 8,875.22. US markets similarly reflected improved sentiment, with the S&P 500 gaining 0.7 per cent, while the Dow Jones and Nasdaq advanced 0.6 per cent and 1 per cent respectively.

Rystad Energy consultancy expert Mukesh Sahdev noted: “The conflict appears contained, with American diplomatic intervention and regional negotiations suggesting an imminent deal with Iran. Oil prices are expected to remain below $80 per barrel.”

Citi analysts maintain their long-term forecast for Brent crude between $60 and $65 per barrel, though near-term trading is anticipated to fluctuate between $70 and $80 until greater political stability emerges in the region.