- Bids are being made to ensure safe passage through the Strait of Hormuz.
- Donald Trump wants nations to secure the Strait of Hormuz.
- Stock markets remain under pressure due to the war.
Oil prices hovered around $100 a barrel Monday and stocks fluctuated as the war in Iran entered its third week, with both sides showing no sign of backing down and diplomats trying to ensure the safe passage of tankers through the crucial Strait of Hormuz.
The price of crude soared in the first minutes after the US president said over the weekend that forces had struck military targets on Kharg Island, a scrubby stretch of land in the Gulf that hosts almost all of Iran’s oil exports.
He also warned that attacks could extend to energy infrastructure if Tehran interferes with transit through Hormuz, which has been effectively closed since US-Israeli operations began on February 28.
Iran’s Fars news agency reported shortly after that no oil infrastructure was damaged in the strikes.
Trump urged other countries to send warships to keep the waterway open, but offered no details or commitment from the United States, saying he hoped China, France, Japan, South Korea and the United Kingdom would participate.
He then wrote in a Truth Social article on Saturday: “Countries around the world that receive oil through the Strait of Hormuz need to take care of this passage, and we will help them – A LOT!
“This should always have been a team effort, and now it will be.”
However, Japan said on Monday it was “not currently considering launching 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 was not ready to make one under current conditions, without elaborating.
Iranian Foreign Minister Abbas Araghchi said his country was not interested in negotiations with Washington.
“We don’t see any reason why we should talk with the Americans, because we were talking with them when they decided to attack us,” he told CBS’s “Face The Nation” in an interview broadcast Sunday.
“There is no good experience of dialogue with the Americans,” adding that “we have never asked for a ceasefire, and we have never even asked for negotiations.”
However, he said he was ready to talk to countries “who want to talk to us about the security of the passage of their ships”.
“I can’t name any specific country, but we have been approached by a number of countries” seeking to ensure safe passage, he added.
Meanwhile, traders hoping for a quick end to the conflict were disappointed after Trump’s top economic adviser, Kevin Hassett, said the Pentagon estimated it could take up to six weeks, even though the operation was ahead of schedule.
The two main crude contracts advanced. Brent rose about 3% to $106.50 before paring its gains, while West Texas Intermediate was around $99.
And with concerns growing that a possible energy crisis could hit the global economy, stock markets remained under pressure.
Tokyo, Shanghai, Sydney, Seoul, Wellington, Manila and Jakarta were all down, although Hong Kong, Singapore and Taipei rose slightly.
“Stocks might welcome any sign that Hormuz could be reopened, but with further strikes still threatened and diplomacy still spotty, conviction is low,” said Charu Chanana of Saxo Markets.
Adding to the economic concerns was data showing Friday that U.S. gross domestic product grew 0.7% in the fourth quarter, much slower than the initial figure of 1.4%.
And late figures showed the Federal Reserve’s preferred inflation gauge fell to 2.8% in January before energy prices soared.
“The weekend’s developments, while no more disconcerting than at the end of last week, offer no obvious pretext for a less pessimistic start to the new trading week,” warned National Australia Bank’s Ray Attrill.
This week, policy meetings will also be scheduled at seven major central banks, including the Fed, the Bank of England and the European Central Bank.
Although they are expected to maintain their interest rates, any comments on the impact of the war on their respective economies will be closely monitored.
