Oil prices rose and stock futures slipped as hopes dimmed for a U.S.-Iran deal to end hostilities and clashes continued near the Strait of Hormuz.
Oil prices rose and U.S. stock futures ticked lower as investors reacted to fading prospects for a U.S.-Iran agreement to end the war and renewed fighting around the Strait of Hormuz.
The market move reflected concern that diplomacy had not produced a deal even as one of the world’s most important energy corridors remained under strain. Brent crude futures were above $101 a barrel on Friday, according to CBC, though still down more than 6% for the week.
Washington had been waiting for Tehran’s answer to a U.S. proposal that would formally end the war before talks on more contentious issues, including Iran’s nuclear program. Secretary of State Marco Rubio told reporters in Rome on Friday that the U.S. expected a response from Iran that day. “We should know something today. ... We’re expecting a response from them,” Rubio said.
Iran said Thursday it was reviewing messages from the U.S. received through Pakistani mediators, according to Iranian state media cited by CNBC. CBC reported that no response had been reported by mid-afternoon in Washington, just before midnight in Tehran.
Reports earlier in the week said the two sides were nearing a 14-point memorandum of understanding to end the war and resume talks over Iran’s nuclear program. But the diplomatic push was overshadowed by fresh incidents in and around the Strait of Hormuz, where shipping disruptions have fed worries about global energy supplies.
Iran’s semi-official Fars news agency reported sporadic clashes between Iranian forces and U.S. vessels in the strait, while Tasnim later cited an Iranian military source saying the situation had calmed but warning more clashes were possible. The U.S. military said it struck two Iran-linked vessels trying to enter an Iranian port, hitting their smokestacks and forcing them to turn back, according to CBC.
The confrontation also spread beyond the waterway. The United Arab Emirates said its air defences engaged two ballistic missiles and three drones from Iran on Friday, with three people sustaining moderate injuries.
President Donald Trump said Thursday the ceasefire was still holding despite the flare-ups. Rubio, however, warned that any attempt by Iran to control traffic through the strait would be unacceptable, saying reports that Tehran was trying to establish an agency to manage passage through the waterway would be “a problem.”
The Strait of Hormuz normally carries around a fifth of global oil supply, and Iran has largely blocked non-Iranian shipping through the route since the war began with joint U.S.-Israeli airstrikes across Iran on Feb. 28, according to CBC. The U.S. imposed a blockade on Iranian vessels last month.
The pressure campaign continued Friday as the U.S. Treasury announced sanctions against 10 individuals and companies, including several in China and Hong Kong, accusing them of helping Iran’s military obtain weapons and raw materials used to build Shahed drones.
At the same time, a U.S. official familiar with a CIA assessment told CBC that Iran could withstand a naval blockade for about four more months before severe economic pressure sets in, suggesting limits to U.S. leverage. A senior intelligence official disputed that account, calling the claims false and saying the blockade was causing compounding damage.
The next test for markets and diplomats is whether Iran delivers a formal response to the U.S. proposal — and whether the ceasefire can survive further clashes in the waterway that has become central to both the war and global energy prices.
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