Oil prices hovered around $100 a barrel Monday and stocks fluctuated as the Iran war moved into a third week with both sides showing no sign of backing down and diplomats trying to ensure safe passage for tankers through the crucial Strait of Hormuz.
Crude shot up in the opening minutes after the US president said at the weekend that forces struck military targets on Kharg Island, a scrubby stretch of land in the Gulf that handles almost all of Iran’s oil exports.
He also warned attacks could expand to energy infrastructure if Tehran interferes with transit through Hormuz, which has been effectively closed since the US-Israel operations began on February 28.
Iran’s Fars news agency reported soon after that no oil infrastructure was damaged in strikes.
Trump urged other countries to send warships to keep the waterway open but offered no specifics or commitments from the US side, saying he hoped China, France, Japan, South Korea and the UK would take part.
He later wrote Saturday in a Truth Social post: “The Countries of the World that receive Oil through the Hormuz Strait must take care of that passage, and we will help — A LOT!
“This should have always been a team effort, and now it will be.”
However, Japan said Monday it was “not at the moment considering issuing a maritime security operation”, while Australia announced it would not send any navy ships to the region.
Trump said Tehran wanted a deal to end the fighting, but that he was not prepared to make one on current terms, without giving further details.
Iran’s Foreign Minister Abbas Araghchi said his country was not interested in talks with Washington.
“We don’t see any reason why we should talk with Americans, because we were talking with them when they decided to attack us,” he told CBS’s “Face The Nation” in an interview aired Sunday.
“There is no good experience talking with Americans,” adding that “we never asked for a ceasefire, and we have never asked even for negotiation”.
However, he did say he was ready to speak to countries “who want to talk to us about the safe passage of their vessels”.
“I cannot mention any country in particular, but we have been approached by a number of countries” seeking such safe passage, he added.
Meanwhile, traders hoping for an early end to the conflict were left disappointed after Trump’s top economics adviser Kevin Hassett said the Pentagon estimates it could take up to six weeks, though the operation was ahead of schedule.
Both main crude contracts advanced. Brent shot up around three percent to as high as $106.50 before paring the gains, while West Texas Intermediate sat around $99.
And with worries growing about a possible energy crisis that could hammer the global economy, equity markets remained under pressure.
Tokyo, Shanghai, Sydney, Seoul, Wellington, Manila and Jakarta were all down, though Hong Kong, Singapore and Taipei edged up.
“Equities may welcome any sign that Hormuz could be reopened, but with further strikes still being threatened and diplomacy still patchy, conviction is low,” said Charu Chanana at Saxo Markets.
Adding to economic concerns was data showing Friday that fourth-quarter US gross domestic product expanded 0.7%, much slower than the initial reading of 1.4%.
And delayed figures showed the Federal Reserve’s preferred inflation gauge dipped to 2.8% in January before energy prices shot higher.
“Developments over the weekend, while no more disconcerting than at the end of last week, don’t offer any obvious pretext for a less pessimistic start to the new trading week,” warned National Australia Bank’s Ray Attrill.
Also in view this week are policy meetings at seven major central banks including the Fed, Bank of England and the European Central Bank.
While they are expected to stand pat on interest rates, any remarks on the impact of the war on their respective economies will be closely followed.
