Oil falls sharply on peace prospects in Iran

BarcelonaThe market is once again trusting in an imminent resolution to the war in Iran, and the oil barrel has noticed it. Investors have appreciated that Iranian authorities are studying a peace proposal, as the North American portal Axios reported this Wednesday morning. Furthermore, they have read the withdrawal of Project Liberty by the President of the United States, Donald Trump —an initiative to provide military escort to ships crossing the Strait of Hormuz— as a gesture of goodwill towards the government of Tehran.

With peace talks more on track, Brent has cut its price by more than 7% this Wednesday, just above 102 dollars for the first time since April 27. North American West Texas has cooled at the same rate, settling at 95 dollars. The cut in crude prices has also given a boost to the stock markets, which have climbed again after the fall last Monday, caused by the banking sector.

The barrel of crude, it should be said, had fallen by nearly 11% during the morning, and had dropped below the 100-dollar threshold for the first time in over two weeks. The fall moderated, however, after a publication by Trump on his social network, Truth Social, in which he threatened to "start a bombing on a much larger scale than has been experienced so far" on Iran if Tehran did not accept the peace conditions.

The threat, however, was not serious enough to reverse the price drop, and only slowed it down. Iran, for its part, has communicated that it is already reviewing the possible peace agreement proposed by Washington, and has helped to cushion the blow from the White House.

The stock market gains momentum

Good oil news has helped to boost European stock markets during the day. The Ibex-35 (the benchmark index on the Spanish stock market), at the close of trading, climbed nearly 2.5%, recovering the 18,000 points lost on Monday due to the banking debacle. The trend was replicated in other major markets, with the British FTSE-100 rising 2.15%. The German Dax 40 revalued 2.2%, while the French CAC-40 registered the best performance, with a rise close to 3% at the end of the session.

In the Spanish case, the big winners were companies most intensive in fossil fuel consumption, such as steelmaker Arcelormittal or airline group IAG, which gained 8% and 6.5% respectively. Banking also recovered ground, driven by more encouraging economic forecasts, with special gains for the most internationalized firms, BBVA (+3%) and Santander (+3.8%). The trend was reproduced in the European environment, with significant jumps in heavy industry and aeronautics: Continental, in the German Dax, rose nearly 9%; while Safran, in France, grew 8.9%.

The rises in the main indices had only one exception: energy companies, especially those most linked to hydrocarbons. In Spain, Repsol is among those that performed worst, with a drop of nearly 4.5%, surpassed only by the plunge of pharmaceutical company Rovi, which fell 16.5%. Naturgy also closed the day in the red, with a minimal erosion, less than 1%; while Iberdrola, Endesa, and Enagás all registered slight gains, also below one percentage point.

In the United Kingdom, the worst performer of the day was BP, with a drop of 3.7%; while in Germany, energy company RWE suffered, losing 1.4%, and in France, TotalEnergies, 3.2%.