Tehran: Oil prices fell sharply after the United States paused its military strikes on Iran, allowing room for diplomatic negotiations. This pause comes as Tehran announced it would cease retaliatory attacks on neighboring regions, providing temporary relief for Gulf shipping routes and the global oil industry. According to France24.com, Iran's army spokesman Mohammad Akraminia stated, "Since ... our strategy has essentially been retaliatory, we have also halted our retaliatory operations." The renewed hostilities between the US and Iran earlier this month disrupted the fragile truce established in April. The conflict escalated when Iran attacked ships traversing through Omani waters in the Strait of Hormuz. The US military responded with 13 consecutive nights of strikes on Iran, the most intense military engagement since the ceasefire. The hostilities spilled over beyond the critical energy passage, with Iran-backed Houthi rebels targeting Saudi vessels in the Bab al-Mandeb Strait, a key entryway to the Re d Sea. This caused crude oil prices to surge, with Brent crude exceeding $100 a barrel last week for the first time since May. However, the continuation of shipping activities in the Red Sea helped stabilize prices on Friday. President Trump's decision to suspend further strikes, coupled with Iran's announcement of progress in talks with Oman regarding the management of the Strait of Hormuz, provided some relief to the market. Discussions between the nations focused on safeguarding shipping passage while respecting sovereign rights, as stated by Iran's foreign ministry spokesman Esmaeil Baqaei. A report also suggested that Pakistan is considering resuming US-Iran peace talks, following an initiative led by China. This development contributed to a significant drop in oil prices on Monday, with Brent crude briefly falling below $90 after shedding more than seven percent at one point. Sally Auld from National Australia Bank noted, "It looks as if developments in the Middle East have moved in a positive direct ion over the weekend, adding some credibility to the notion that oil above $100 a barrel seems to induce de-escalatory behaviour from both sides." The encouraging diplomatic progress alleviated concerns about rising inflation and potential interest rate hikes, leading to an upswing in most equity markets. However, skepticism over the sustainability of the AI sector's rapid growth and the substantial investments made in it continues to affect traders, particularly in the technology sector. In Asia, Seoul experienced significant losses, with semiconductor giants SK hynix and Samsung taking a hit. Markets in Taipei and Singapore also fell, while Jakarta retreated following the unexpected resignation of Indonesian central bank chief Perry Warjiyo, who cited personal reasons. Conversely, Tokyo's market rose, although tech companies such as Advantest, Kioxia, and Tokyo Electron faced considerable selling pressure. Markets in Hong Kong, Sydney, Shanghai, Wellington, and Manila saw gains.
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