‍Global stocks rise, oil sinks as US and Iran outline path to end war‍

Global stock markets rallied and oil prices fell sharply after the US and Iran unveiled a framework aimed at ending their conflict. Investor sentiment improved on hopes of reduced geopolitical risk and the reopening of the vital Strait of Hormuz, a key global oil shipping route. The prospect of restored energy supplies pushed crude prices lower, while equities gained worldwide as markets welcomed signs of stability, easing inflation concerns and supporting expectations for stronger economic growth.

Asian markets rallied sharply after Washington and Tehran reached a major diplomatic breakthrough, paving the way for the reopening of the strategically crucial Strait of Hormuz.

Investor optimism swept across the region after the two sides unveiled a framework aimed at bringing an end to the US-Israel conflict with Iran.

Japan’s Nikkei 225 surged 5.5% in early trading on Monday, while South Korea’s Kospi soared as much as 5.7%, reflecting growing confidence among investors.

Taiwan’s Taiex advanced up to 2.7%, while Australia’s ASX 200 gained around 1.5% as markets reacted positively to the prospect of reduced geopolitical risk.

Hong Kong’s Hang Seng Index initially climbed about 1%, although some of those gains were later trimmed during the morning session.

US stock futures also pointed to a stronger Wall Street open, with contracts linked to the S&P 500 rising roughly 1% and Nasdaq Composite futures jumping 1.8%.

Meanwhile, Brent crude oil fell about 4.5% to below $83.40 a barrel as traders priced in the possibility of smoother global energy supplies.

According to Khoon Goh, Head of Asia Research at ANZ, markets had already begun responding after President Trump hinted last week that an agreement was near, but official confirmation sparked an even stronger rally.

The decline in oil prices is expected to ease concerns among central banks that higher energy costs could reignite inflationary pressures.

Investors are now closely watching the US Federal Reserve, which is due to announce its latest interest-rate decision this week.

US President Donald Trump announced on Sunday that a deal with Iran had been completed, saying he had authorised the reopening of the Strait of Hormuz and the immediate removal of the US naval blockade of Iranian ports.

In a post on Truth Social, Trump celebrated the development by urging global shipping traffic to resume and declaring, "Let the oil flow."

The agreement gained further momentum after Iran’s Supreme National Security Council confirmed that both sides had finalised the wording of a memorandum of understanding.

Pakistani Prime Minister Shehbaz Sharif, whose government played a key role in mediating the negotiations, said a formal signing ceremony is scheduled to take place in Switzerland on Friday.

While officials have yet to release the full text of the deal, Iranian news agency Mehr reported that the agreement includes an immediate halt to hostilities across all fronts, including Lebanon, the suspension of sanctions on Iranian oil exports, and the release of $24 billion in frozen Iranian assets.

If successfully implemented, the accord could restore normal shipping through the Strait of Hormuz, one of the world's most important energy corridors, after nearly four months of disruption caused by military tensions, Iranian threats and the US naval blockade.

According to the International Energy Agency (IEA), the closure of the waterway has removed roughly 14 million barrels of oil per day from global supply chains, contributing to higher fuel prices and shortages in several countries.

Despite the optimism, industry experts caution that a return to normal operations will not happen overnight.

Energy infrastructure, shipping routes and supply chains have been severely disrupted, while concerns remain over possible naval mines and the large number of vessels stranded in and around the Gulf.

Speaking at an energy forum in Washington last week, US Energy Secretary Chris Wright warned that it could take "many months" for global energy supplies to fully stabilise.

Svein Ringbakken, managing director of the Norwegian Shipowners’ Mutual War Risks Insurance Association, said thousands of ships remain stuck near the strait, creating a logistical challenge that could take months to resolve.

He noted that even if shipping resumes immediately, damaged port facilities, disrupted production networks and storage shortages will continue to create bottlenecks across global trade.

Ringbakken also warned that if mines have been deployed in the waterway, extensive clearance operations may be required before shipping can safely return to full capacity.

Others remain even more sceptical.

SV Anchan, chairman of US-based shipping company Safesea Group, said the lack of publicly available details makes it difficult to assess the true impact of the agreement.

He predicted that it could take more than a year for conditions to fully normalise and questioned how quickly shipping insurers and underwriters would be willing to resume business in the region.

"For now, this remains a headline rather than a certainty," Anchan said, adding that the industry will be closely watching developments over the coming days before making major operational decisions.

For questions or comments write to contactus@bostonbrandmedia.com

Source: aljazeera