Oil jumps on Hormuz tensions, stocks retreat
US and European stocks reversed Monday as oil prices surged over fears hostilities could resume in the weeks-long Middle East war after Iran closed the Strait of Hormuz following its brief reopening.
Investors were on edge approaching the end of the US-Iran ceasefire, with Iran insisting it has no plan to attend a new round of negotiations with the United States.
"The market mood is very different at the start of the week compared to Friday," said Kathleen Brooks, research director at trading group XTB.
Crude had plunged Friday after the Islamic republic said it would again allow ships to pass through the Strait of Hormuz, through which a fifth of global oil and liquefied natural gas usually passes.
But world oil prices bounced on Monday as Iran closed the waterway and said the US blockade and seizure of an Iranian cargo ship breached the two-week ceasefire.
"Renewed attacks on commercial vessels in the Strait of Hormuz increased fears of supply disruptions and raised the risk of a broader escalation in hostilities between the US and Iran," said Trade Nation analyst David Morrison.
"Uncertainty also remains over whether negotiations in Islamabad will proceed after Iran said it would not attend talks while the blockade remains in place," he added.
Wall Street's main indices dipped as trading got underway in New York, with the S&P 500 and Nasdaq Composite falling from record closes.
The S&P 500 shed 0.1 percent, the Nasdaq Composite 0.2 percent and the blue-chip Dow less than 0.1 percent.
In mid-afternoon trading in Europe, Frankfurt dropped 1.0 percent, Paris shed 0.8 percent and London gave up 0.5 percent.
That came after gains for Tokyo, Hong Kong and Shanghai.
"Asian shares rebounded as they were in catch-up mode, having missed the rally seen in the US and Europe on Friday," said AJ Bell investment director Russ Mould.
"European indices presented a truer picture of the market mood, with investor wariness and weariness amid the continuing tensions in the Middle East," he added before trading began in New York.
The blockade of Iranian ports has been a significant sticking point in negotiations between the two countries, with both accusing the other of ceasefire violations.
There has so far been only one negotiating session, held in Islamabad on April 11 that ended inconclusively, although groundwork for fresh talks continued afterwards.
"We're offering a very fair and reasonable DEAL, and I hope they take it," Trump said in a social media post Sunday, while also renewing his threats against Iran's infrastructure if a deal is not made.
Iran's Revolutionary Guards warned that any attempt to pass through the strait without permission "will be considered cooperation with the enemy, and the offending vessel will be targeted".
Chris Weston at Pepperstone said traders were assessing "whether the ceasefire can be salvaged through this week’s diplomatic talks, with recalibration on the probability of military escalation".
"Without a comprehensive agreement on Iran’s nuclear programme, the ceasefire remained fragile."
- Key figures around 1330 GMT -
West Texas Intermediate: UP 4.5 percent at $86.32 a barrel
Brent North Sea Crude: UP 3.8 percent at $93.85 a barrel
New York - Dow Jones: DOWN less than 0.1 percent at 49,430.40 points
New York - S&P 500: DOWN 0.1 percent at 7,106.45
New York - Nasdaq Composite: DOWN 0.2 percent at 24,416.40
London - FTSE 100: DOWN 0.5 percent at 10,618.01
Paris - CAC 40: DOWN 1.8 percent at 8,354.08
Frankfurt - DAX: DOWN 1.0 percent at 24,454.52
Tokyo - Nikkei 225: UP 0.6 percent at 58,824.89 (close)
Hong Kong - Hang Seng Index: UP 0.8 percent at 26,361.07 (close)
Shanghai - Composite: UP 0.8 percent at 4,082.13 (close)
Euro/dollar: UP at $1.1778 from $1.1776 on Friday
Pound/dollar: DOWN at $1.3527 from $1.3530
Dollar/yen: UP at 158.64 yen from 158.49 yen
Euro/pound: UP at 87.05 pence from 87.02 pence
burs-rl/gv
R.Pilialoha--HStB
