Crude oil surges past $108 per barrel as Gulf disruption fears outweigh diplomatic signals

 

• Oil rises on continued Mideast supply disruption fears.
• Brent up 2.75% at $108.23; WTI up 2.09% at $96.37.
• Shipping through Strait of Hormuz remains constrained.
  

Oil prices rose on Monday as Middle East supply risks and stalled US-Iran diplomacy kept energy markets on edge, even as global equities posted modest gains on hopes of a possible diplomatic opening.

Brent crude climbed 2.75% to settle at $108.23 a barrel, while US West Texas Intermediate rose 2.09% to $96.37, as traders weighed continued disruptions to shipping flows through the Strait of Hormuz following the US-Israeli strikes on Iran two months ago.

Sentiment in broader markets improved slightly after the White House said President Donald Trump was reviewing a new Iranian proposal, earlier disclosed by Iranian sources.

The proposal reportedly suggests postponing discussions on Iran’s nuclear programme until after the war ends and disputes over Gulf shipping routes are resolved. Mediators from Pakistan said on Monday that efforts to bridge gaps between Washington and Tehran are still ongoing.

MSCI’s global equities index edged higher, with investors also positioning cautiously ahead of a heavy week of megacap earnings, economic data releases and central bank decisions.

“The market has come to the conclusion that there will be a resolution sooner or later,” said John Praveen, co-chief investment officer at Paleo Leon in Princeton.

Still, oil markets remained the main pressure point, with traders focused on the risk of prolonged disruption to energy flows from the Gulf.

On Wall Street, the Dow Jones Industrial Average fell 62.92 points, or 0.13%, to 49,167.79, while the S&P 500 rose 8.83 points, or 0.12%, to 7,173.91. The Nasdaq Composite gained 50.50 points, or 0.20%, to 24,887.10.

MSCI’s gauge of global stocks rose 2.32 points, or 0.22%, to 1,074.52. Earlier, the pan-European STOXX 600 index closed down 0.3%.

While worrying about the Iran war, investors also waited with bated breath for economic data and earnings reports, according to Phil Blancato, chief market strategist at Osaic Wealth in New York. 

This week's data will include first-quarter US economic growth and the March Personal Consumption Expenditures Price Index, which is the Federal Reserve's preferred gauge for inflation.

"We're in this holding-on moment here. I don't think the market's going to grind a lot higher," said Blancato. "The market is trying to hold on to its gains, waiting for more information to support where we've gone so far this year."

Capital expenditure plans will be a key focus for firms such as Microsoft, Alphabet, Amazon and Meta Platforms, when they report quarterly results on Wednesday, while Apple is scheduled to release results a day later.

Central bank meetings

In currencies, the US dollar slipped on Monday as investors were on edge about the Middle East and a slate of central bank meetings later this week.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.16% to 98.49, with the euro up 0.01% at $1.1721.

Against the Japanese yen, the dollar strengthened 0.01% to 159.39.

Major central banks are expected to keep policy on hold this week, including the US Federal Reserve. The Fed's meeting, which runs Tuesday through Wednesday, will likely be the last with Jerome Powell as chair.

The first central bank to meet will be the Bank of Japan, which is expected on Tuesday to keep its short-term policy rate steady at 0.75%, while the European Central Bank and Bank of England are expected to keep policy unchanged.

In US Treasuries, the yield on benchmark US 10-year notes rose 2.5 basis points to 4.336%, from 4.31% late on Friday, while the 30-year bond yield rose 2.5 basis points to 4.9409%.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 2.3 basis points to 3.799%, from 3.776% late on Friday.

In precious metals, spot gold fell 0.62% to $4,679.09 an ounce.