Peter HoskinsEconomic journalist
Hindustan Times via Getty Images
Oil prices fell sharply and Asian stock markets rose on hopes of a deal that could end the U.S.-Israel war against Iran.
US Secretary of State Marco Rubio said during a visit to India that negotiators had “a pretty solid thing on the table” and a deal to end the conflict could be reached on Monday.
On Monday morning, global oil benchmark Brent fell 5.5% to $97.90 (£72.64) a barrel, while US-traded crude was down 5.9% to $90.93.
US President Donald Trump previously said the deal would include reopening the main shipping route through the Strait of Hormuz, without giving further details.
The narrow waterway, through which around a fifth of the world’s oil and liquefied natural gas (LNG) usually passes, has been effectively closed since the conflict began on February 28.
Japan’s Nikkei 225 stock index rose above 65,000 for the first time after gaining 3% on hopes of the strait reopening soon.
Japan, like neighboring South Korea, has been particularly affected by the conflict because it relies heavily on energy from the Gulf.
Energy and financial markets in the UK and US are closed on Monday for public holidays.
“We’re still a work in progress. Like I said, you know, we thought we’d have news last night. Maybe today,” Rubio said in the Indian capital, Delhi.
His comments came after Trump said he had asked negotiators “not to rush into a deal,” after suggesting a deal was close.
Trump said on social media Saturday that he had a “very good call” with the leaders of Saudi Arabia, the United Arab Emirates, Qatar and others about a “memorandum of understanding for PEACE.”
“An agreement has been extensively negotiated, subject to finalization between the United States of America, the Islamic Republic of Iran and the various other listed countries,” Trump said.
“The final aspects and details of the agreement are currently being discussed and will be announced shortly.”
He also said he had a call on Saturday with Israeli Prime Minister Benjamin Netanyahu, which “went very well.”
The president did not elaborate on the deal, but insisted that any agreement would “absolutely” prevent Iran from obtaining a nuclear weapon.
But on Sunday he said on Truth Social: “Both sides need to take their time and get it right. There can be no mistakes!”
Iranian Foreign Ministry spokesman Esmaeil Baqaei said earlier on state television that U.S. and Iranian positions had converged last week, but warned that did not mean agreements would be reached on key issues and accused the Americans of “conflicting statements.”
Global energy markets have seen sharp price swings since early March after Iran threatened to attack ships attempting to use the Strait of Hormuz in retaliation for U.S. and Israeli attacks on the country.
Although crude oil prices have fallen sharply today, they remain significantly higher than before the war.
Before the conflict, Brent was trading at around $70 per barrel.
Tehran has also attacked Israel and U.S. allied states in the Gulf, including Saudi Arabia, Bahrain and the United Arab Emirates.
A ceasefire was agreed in early April and since then Washington and Tehran have engaged in negotiations on a long-term peace deal.
“There is now some light at the end of the tunnel, which will provide some relief from oil prices in the near term,” said Saul Kavonic, head of energy research at MST Financial.
“But even in the most optimistic scenario, oil markets will remain tight through 2027 given the time needed to normalize oil flows across the strait, repair damaged oil installations and replenish global oil stocks that have seen record depletion since the start of the war,” he added.
