Oil prices fell sharply while most Asian stock markets advanced on Monday amid growing optimism that the United States and Iran could reach an agreement to ease tensions in the Strait of Hormuz, a key global energy shipping route.
Brent crude and West Texas Intermediate (WTI) both declined by nearly five percent in early trading. Brent crude dropped to around $99.41 per barrel, while WTI fell to $92.49, reflecting market hopes that a potential deal could stabilise global energy supplies and reduce inflationary pressure worldwide.
Investor sentiment improved after signs emerged that Washington and Tehran were moving closer to a possible agreement to ease the conflict that has disrupted the Middle East since late February. The war had driven energy prices sharply higher and raised concerns about supply disruptions in global oil and gas markets.
However, uncertainty remains over several unresolved issues in the negotiations. US President Donald Trump said on Sunday that he had instructed American negotiators not to rush into a deal, stressing that both sides needed to proceed carefully.
Iranian media also reported that disagreements continue over several important clauses, including Tehran’s stockpile of highly enriched uranium, the release of frozen Iranian assets, and regional security issues involving Lebanon.
Despite the remaining hurdles, financial markets across Asia reacted positively to hopes of progress. Japan’s Nikkei index jumped more than three percent, while markets in Shanghai, Taipei, Singapore, Sydney, Bangkok and Jakarta also posted gains. Hong Kong and Seoul markets were closed for public holidays.
Analysts said investors are also closely monitoring upcoming US inflation data, particularly the Personal Consumption Expenditures (PCE) index, which is the Federal Reserve’s preferred measure of inflation.
The conflict began after US and Israeli strikes on Iran in February, followed by retaliatory attacks from Tehran across the region. Although a ceasefire has largely held since early April, tensions over shipping routes and sanctions continue to influence global energy and financial markets.
