Asian shares turned hesitant as news of a fresh US military strike in Iran challenged investor optimism on a near-term peace deal.
Oil prices bounced higher on Thursday (May 28) while Asian stocks mostly fell, as new US strikes on Iran marked the latest test of a shaky ceasefire in the Middle East war.
The price jumps erased much of Wednesday’s declines on the hopes of an imminent deal to end the conflict that has all but halted shipping through the crucial Strait of Hormuz for months.
An American official said the military had shot down four Iranian drones and struck a control centre in the southern city of Bandar Abbas.
The official, speaking to AFP on condition of anonymity, described the latest actions as “measured, purely defensive, and intended to maintain the ceasefire”.
Tehran’s state media said Iranian forces had fired at four ships in the strait, while Kuwait said its air defences were responding to missile and drone attacks.
The developments came despite an Iranian official saying renewed hostilities with the United States were unlikely, and a threat from US President Donald Trump to “finish the job” if a peace deal was not reached.
The mixed signals underscored the fragile state of talks aimed at ending the Middle East war, which has profoundly shaken global energy markets.
Brent North Sea crude, the main international benchmark, rose by 1.8 per cent in Thursday morning trade to US$95.95 a barrel, while the main US contract, WTI, increased by 1.7 per cent to US$90.17.
“Over the next two weeks, we expect either a deal for a new ceasefire, or the current ceasefire will have collapsed with active hostilities resuming,” said Madison Cartwright, a senior geo-economics analyst at CBA.
He put a 70 per cent probability on a deal being agreed, while cautioning that the fate of the strait was up in the air.
“Insurance through the strait has become prohibitively expensive and it’s unclear how and at what price insurance will be made available,” he added. “It is also not clear if Iran will charge a toll, or a toll by another name.”
Stock markets across Asia were mostly down, with Hong Kong’s Hang Seng index dipping more than 1.5 per cent.
Seoul was down nearly 1 per cent, while Shanghai ticked 0.3 per cent lower.
Taipei’s main index gained more than 1 per cent, while Tokyo was flat at the midday break.
Source : https://www.channelnewsasia.com/business/oil-prices-us-iran-strikes-6146076
