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Oil steadies near $85 after US-Iran strike pause, but Hormuz stays closed
Brent fell sharply from a brief move above $100 last week to around $85, helped by reduced inflation fears, while Hormuz remains closed and shipping disruptions continue across the Gulf and Red Sea.
Risk sentiment improved at the start of the week after the United States and Iran suspended military strikes over the weekend, prompting investors to unwind part of the geopolitical risk premium priced in earlier. Brent crude, which briefly traded above the psychologically important $100 level last week due to supply disruption fears, opened sharply lower with a large downside gap before stabilizing around $85.
The oil retreat helped ease immediate concern about another inflation shock and boosted demand for risk assets, a shift reflected in multiple equity markets. In Asia, Japan’s Nikkei closed 0.5% higher and South Korea’s KOSPI rose 0.97%, while European trading extended the rally with Germany’s DAX up more than 1.5%.
US equity futures also signaled a stronger open, with Dow futures up more than 500 points, as investors began pricing a scenario in which the Middle East conflict does not turn into a prolonged regional war that would keep global energy supplies under sustained pressure.
Still, Action Forex cautioned that the relief move could be premature because the physical energy supply disruptions remain unresolved. The US halted a two-week stretch of strikes to give diplomacy “some space,” and Iran refrained from attacking regional targets, but Iran’s Foreign Ministry spokesperson Esmail Baghaei said the Strait of Hormuz has not changed and is still closed, with traffic severely disrupted and Red Sea shipping disruptions not normalized.
Latest closeWTI crude $90.47 ▼1.9%|Brent $98.38 ▼2.3%|Dow Jones 51,947.25 ▲0.5%