Oil at three-week high after US-Iran peace talks stall

Oil prices are climbing today (27), after US officials cancelled a planned trip to Pakistan over the weekend for peace talks, dimming hopes for a swift end to a conflict that has choked off much of the Middle East’s vast oil and natural gas supplies from global markets.

Brent crude, the global oil benchmark, is up 2.5% to nearly $108 a barrel — it’s highest level in three weeks, when the current ceasefire between the United States and Iran started. WTI, the US benchmark, is up 2.2% to $96.4 a barrel.

As the conflict nears the two-month mark, Goldman Sachs raised its oil price forecasts for the fourth quarter of this year to $90 a barrel for Brent, from $80 previously. The bank sees WTI at $83 a barrel, versus $75 previously.

In a note Sunday, the bank’s analysts warned of “larger” economic risks because of “upside risks to oil prices, unusually high refined product prices, products shortages risks, and the unprecedented scale of the shock.”

Iran warned Sunday that the Strait of Hormuz, ordinarily a conduit for around a fifth of the world’s oil and natural gas supply, will not return to its pre-war state. Meanwhile, US President Donald Trump reiterated that the war could “come to an end very soon.”

Equity investors appear to be betting on that outcome, buoyed too by optimism over artificial intelligence, with a raft of major tech companies reporting earnings this week. The S&P 500 and Nasdaq both closed at record highs Friday, although US futures are flat this morning.

In Asia, most major stock indexes closed strongly higher today, although Hong Kong’s Hang Seng finished slightly lower. Stock markets in Europe are modestly higher in morning trade.

“The lack of progress on talks has failed to dent investor optimism,” said Neil Wilson, an investor strategist at Saxo Bank.

Source: CNN
-- Agencies