Oil prices fell slightly on Tuesday while most global stock markets moved higher, as investors held onto cautious hopes that tensions between the United States and Iran could ease through fresh negotiations.
Brent crude fell 0.7 per cent to $94.81 per barrel, while US benchmark crude declined 0.9 per cent to $86.63.
The oil market has remained volatile in recent days, largely due to disruptions in the Strait of Hormuz, which has seen repeated disruptions since the conflict began on 28 February.
Oil prices had surged earlier amid escalating tensions, before dropping sharply last Friday after Iran indicated it would allow ships to pass through the strait. However, prices rebounded on Monday when the waterway was effectively closed again following a US naval blockade and the seizure of an Iranian-flagged vessel.
US President Donald Trump has called for the full reopening of the Strait of Hormuz and maintained that the blockade on Iranian ports will continue until a deal is reached. He also warned that the current ceasefire - set to expire late Tuesday US time - may not be extended, raising concerns of renewed conflict.
The White House said Vice President JD Vance is ready to travel to Islamabad for possible negotiations, though Tehran has not confirmed whether it will participate.
Iranian Parliament Speaker Mohammad Bagher Ghalibaf signalled a firm stance, saying the country would not engage in talks under pressure and remains prepared for further escalation if necessary.
Despite these tensions, global equity markets showed resilience. In Europe, Germany’s DAX rose 0.6 per cent to 24,558.9, while France’s CAC 40 remained largely unchanged at 8,333.05. Britain’s FTSE 100 edged up 0.1 per cent to 10,620.92.
Asian markets also posted gains, led by South Korea’s Kospi, which jumped 2.7 per cent on the back of a strong technology rally. Japan’s Nikkei 225 rose 0.9 per cent, supported by shares such as Tokyo Electron, which gained 3.5 per cent, and SoftBank Group, which surged 8.5 per cent amid optimism over artificial intelligence-related growth. Taiwan’s Taiex climbed 1.8 per cent, while Hong Kong’s Hang Seng added 0.5 per cent and China’s Shanghai Composite rose 0.1 per cent. Australia’s S&P/ASX 200 remained largely flat.
In the United States, futures for the S&P 500 and the Dow Jones Industrial Average edged up slightly by more than 0.1 per cent, following a modest pullback on Wall Street on Monday. The S&P 500 fell 0.2 per cent, the Dow dipped marginally, and the Nasdaq declined 0.3 per cent from recent record highs.
Market analysts said investors are cautiously optimistic, pricing in the possibility of diplomatic progress while remaining alert to sudden developments. Continued disruptions in the Strait of Hormuz remain a key concern for global oil supply and inflation.
Meanwhile, Japan’s decision to ease long-standing restrictions on arms exports boosted shares of defence-related companies, reflecting broader shifts in global security policy and economic strategy.
In currency markets, the US dollar strengthened to 159.21 Japanese yen, while the euro slipped slightly to $1.1767.
Analysts noted that despite recent volatility, oil prices remain below their earlier peaks during the conflict, and US equities continue to trade above pre-war levels, supported by strong corporate earnings and resilient consumer demand. Key earnings reports from companies such as UnitedHealth Group, Tesla, and Procter & Gamble are expected later this week, which could further influence market direction.
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