Oil Prices Rise Amid Tensions
Oil prices exceeded $110 per barrel on Tuesday following comments by President Donald Trump regarding Iran. Brent crude, the international benchmark, increased by 1% to $111 a barrel, while New York light crude climbed 2.6% to $115.3 a barrel.
Investor concerns have intensified as Iran demands the reopening of the Strait of Hormuz as part of any agreement to end the ongoing conflict. The strait is a critical passage through which approximately one-fifth of the world's oil and gas supplies transit.
President Trump's Statement and Deadline
Speaking to reporters at the White House on Monday, President Trump set a deadline of Tuesday 8pm ET (1am BST Wednesday) for Iran to reach a deal with Washington. He warned that failure to comply could result in further attacks targeting Iran's civil infrastructure, including power plants.
"The entire country can be taken out in one night, and that night might be tomorrow night,"
Trump emphasized the importance of securing passage through the Strait of Hormuz, describing it as a "very big priority" that should be included in any ceasefire agreement.
Mixed Stock Market Reactions
Stock markets in Asia showed mixed responses on Tuesday. Japan's Nikkei index remained flat, South Korea's Kospi rose by 1.1%, while Hong Kong's Hang Seng declined by 0.7%.
In Europe, the UK's FTSE 100 index dropped 0.2% in early trading. France's Cac 40 increased by 0.5%, Germany's Dax 30 decreased by 0.1%, and the Stoxx Europe 600, which tracks major European companies, was broadly flat with a slight increase of less than 0.1%.
Market Volatility Linked to Strait of Hormuz Closure
Markets have experienced volatility since the US and Israel conducted attacks on Iran in February. The effective closure of the Strait of Hormuz has contributed to supply concerns and shaken investor confidence.
IMF Chief Warns of Inflation and Slower Growth
On Monday, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), cautioned that the ongoing war is likely to result in higher inflation and slower global economic growth.
"Before the war began the IMF had expected a small upgrade in its expectation for global growth of 3.3% in 2026 and 3.2% in 2027,"
Georgieva stated,
"Instead, all roads now lead to higher prices and slower growth."
The IMF is scheduled to release its World Economic Outlook report next week.
She further remarked on the current global environment,
"We are in a world of elevated uncertainty,"
citing factors such as geopolitical tensions, climate shocks, demographic changes, and technological advancements.
"All of this means that after we recover from this shock, we need to keep our eyes open for the next one."
