Oil Prices Increase, Stock Prices Decline After Threat to US-Iran Ceasefire

Global financial markets faced a sharp reversal on Friday as oil prices climbed and stock indices fell following an exchange of fire between the United States and Iran in the strategically vital Strait of Hormuz. The incident has placed significant strain on a fragile ceasefire that has held for weeks, reigniting fears of a broader regional conflict and disrupting global energy supplies.

Brent crude, the international benchmark accounting for two-thirds of the world's oil trade, jumped as high as 2.9 percent to touch $103 per barrel before settling slightly lower. By 9:05 AM UAE time, it was trading up 1.49 percent at $101.43. Similarly, West Texas Intermediate (WTI), the US crude gauge, gained 1 percent to reach $95.78. This surge ended a three-day losing streak for oil, although both benchmarks remain down more than 6 percent for the week as traders weigh the risk of escalation against the possibility of a renewed truce.

The volatility stems from reports that the US intercepted "unprovoked Iranian attacks" on naval vessels transiting the strait. US Central Command confirmed it neutralized inbound threats and struck Iranian military sites used to target American forces. In response, a spokesman for Iran's Khatam Al Anbiya Central headquarters accused the US of breaching the ceasefire. Despite the exchange, US President Donald Trump stated that the ceasefire is technically holding and that negotiations between Washington and Tehran are continuing with progress toward a deal.

The Strait of Hormuz, which normally handles a fifth of global oil and gas supplies, has been effectively closed since the conflict began on February 28, creating an unprecedented supply shock.

The geopolitical tension also weighed heavily on global equities, dampening a rally driven by strong corporate earnings and hopes for a diplomatic resolution. Asian markets led the decline, with Japan's Nikkei 225 dropping 0.29 percent, Hong Kong's Hang Seng falling 1.01 percent, and Australia's S&P ASX 200 retreating 1.38 percent. Even China's Shanghai Composite and India's markets slipped. The US benchmarks also closed lower on Thursday amid threats from President Trump to intensify strikes if a deal is not reached soon.

Compounding the tension, the UAE activated its air defense systems on Friday to counter renewed Iranian drone and missile threats, signaling that the region remains on high alert. As the third month of the conflict continues, the world watches closely to see if diplomacy can prevail or if the Strait of Hormuz will remain a flashpoint for global economic instability.

This article was previously published on UAE Moments. To see the original article, click here