HONG KONG: Oil prices extended gains Friday (Apr 24) and stocks struggled as investors worried about a lack of progress in ending the Middle East crisis, with Tehran keeping the Strait of Hormuz closed and the US maintaining a blockade of Iranian ports.
A week that started with hopes the two sides would eventually hold peace talks was set to end on a negative note, with Donald Trump saying he had “all the time in the world” despite fears about the impact of the war on the global economy.
With few developments to fuel buying, traders took a cautious approach heading into the weekend and ahead of a slew of earnings next week from Wall Street titans, including Alphabet, Meta, Microsoft, Amazon and Apple.
Crude has jumped about a fifth in the past week, having tumbled last week to one-month lows on optimism that a peace agreement would be reached.
Both main contracts rose more than 1 per cent Friday, having advanced around 3 per cent the day before, with Iran refusing to join talks while the US blockade remained in place.
With the Strait of Hormuz effectively closed, the International Energy Agency warned liquefied natural gas (LNG) supplies were likely to remain strained through the end of 2027. The waterway usually sees a fifth of global oil and gas supplies pass through it.
The standoff weighed on equity markets, with Shanghai, Sydney, Seoul, Singapore, Mumbai, Bangkok, Manila, Wellington and Jakarta all down.
However, Taipei surged more than 3 per cent thanks to a rally in chip titan TSMC, which hit a record high, after Taiwanese officials said they would ease a rule preventing more than 10 per cent of a fund’s net asset value being invested in any single stock.
Tokyo and Hong Kong also rose.
“Market confidence has started to shift into a more cautious phase, as new comments from Iran suggest that a full reopening of the Strait of Hormuz is not possible while US blockades remain in place,” wrote Julian Pineda, market analyst at City Index.
“So far, no meaningful progress has been made in negotiations, with both sides maintaining relatively firm positions, leaving the short-term outlook unclear.
“This situation is starting to dampen the steady rise in market confidence seen in recent weeks.”
Still, there was some good news as Trump said a ceasefire between Israel and Lebanon would be extended for three weeks.
“I think there’s a very good chance of having peace. I think it should be an easy one,” he told reporters Thursday during a meeting between Israeli and Lebanese ambassadors.
He added that he plans to meet with top leadership from both countries in the next couple weeks.
The war between Israel and Iran-backed Hezbollah in Lebanon has been a key sticking point in Washington and Tehran finding a breakthrough.