Oil prices tumbled and stocks in Asia surged on Thursday as investors breathed a sigh of relief after the United States and Iran reached a last-minute cease-fire agreement, temporarily avoiding a worst-case scenario of President Trump following through on his pledge to wipe out Iran.
The cease-fire deal came 90 minutes before a deadline set by Mr. Trump for Iran to accede to his demands or risk widespread devastation, which could have caused even greater disruptions to energy supplies from the Middle East. The deal calls for a two-week period when the United States would suspend strikes on Iran, and Tehran would allow vessels and tankers carrying oil, gas and other commodities to pass through the Strait of Hormuz, a vital waterway for transit of oil and gas.
The abrupt de-escalation allowed investors to take a respite from the turbulence that has roiled financial markets since the fighting began last month.
Oil prices fall sharply.
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The price of Brent crude, the global benchmark for oil, was about $95 a barrel. It fell about 13 percent after the cease-fire news.
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West Texas Intermediate crude, the U.S. benchmark, was around $96 a barrel, down about 15 percent.
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Investors and analysts are focused on the Strait of Hormuz, the narrow waterway between Iran and Oman that is a vital trading route for oil and natural gas that normally carries as much as one-fifth of the world’s oil supply. Shipping traffic exiting the Persian Gulf through the strait has been effectively halted since the war began. Attacks on energy infrastructure, by both Israel and Iran, have raised concerns about longer-lasting damage to the world’s oil and gas supply.
Stocks jump.
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Futures on the S&P 500 rose more than 2 percent, pointing to a strong open when stocks resume trading in the United States on Wednesday.
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Stocks in Asia, where countries import vast quantities of oil and gas, posted big gains across the region. Japan’s Nikkei 225 rose about 5 percent, while South Korea’s benchmark Kospi Index rose more than 6 percent. Markets in Taiwan, Hong Kong, and mainland China all posted significant increases.
Gasoline prices continue to rise.
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U.S. gas prices rose again on Tuesday, jumping to a national average of $4.14 a gallon, according to the AAA motor club. The increase has raised the cost for drivers by 39 percent since the war began.
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Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days.
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Diesel prices have increased even more quickly and stood at $5.65 on Tuesday, up 50 percent since the start of the war.
The post Oil Prices Plunge and Stocks Surge After Cease-Fire Deal appeared first on New York Times.
