War premium returns to oil prices
Oil prices in international markets have risen again following the escalation of tensions between the US and Iran over the weekend. The price of Brent crude increased by around 0.9 percent as mutual attacks between Iran and the US weakened expectations for a return to normal ship traffic in the Strait of Hormuz.
Brent crude oil futures for August delivery were trading at $73.21 per barrel as of 03:30 GMT on the first trading day of the week. This figure was 127 cents above the level seen on the day before the US and Israel launched a war against Iran on February 28.
Analyst calls it a 'reality check'
Fabien Yip, a market analyst at IG in Sydney, Australia, said the partial recovery in Brent crude reflected a market that had become too optimistic about a ceasefire. Yip noted that oil had almost fully priced out the war premium despite a memorandum of understanding with no implementation details and ongoing attacks.
The analyst stated that the attack on a commercial ship on Thursday was a reality check, and the mutual strikes over the weekend further reinforced this situation.
Mixed trading in Asian markets
Asian stock markets started the week on a mixed note. Japan's Nikkei 225 index fell 0.7 percent, while South Korea's Kospi index lost 1.9 percent. In contrast, Hong Kong's Hang Seng Index rose 2.2 percent and Taiwan's Taiex index gained 1.4 percent.
Japanese and South Korean stocks related to the artificial intelligence boom experienced the largest losses. Japanese technology giant SoftBank Group lost around 5 percent, and semiconductor test equipment manufacturer Advantest Corporation fell 3.7 percent. South Korean memory chip giants Samsung Electronics and SK Hynix dropped around 5 percent and 4 percent, respectively.
Mutual attacks and ceasefire talks
The US Central Command announced that it carried out strikes against Iran on Friday and Saturday, citing Iran's attacks on two commercial ships in the Strait of Hormuz, through which about one-fifth of the global oil and liquefied natural gas trade passes during peacetime. Iran responded to these attacks by launching a series of missiles and drones at US military assets in Bahrain and Kuwait.
Late on Sunday, multiple media outlets reported, citing unnamed US officials, that Washington and Tehran had agreed to halt their attacks and restart negotiations to end the war. The Axios news site, citing a senior unnamed US official, also reported that the parties would hold talks on Tuesday in the Qatari capital, Doha. There has been no comment yet from Iran regarding the reported ceasefire and upcoming talks.
US President Donald Trump and Iranian President Masoud Pezeshkian signed a memorandum of understanding on June 17 aimed at ending the war. However, the agreement has come under repeated strain due to renewed clashes and disagreements over the meaning of the text.
