Oil falls sharply on peace prospects in Iran
Brent again brushes against 100 dollars and accelerates the stock markets
BarcelonaThe market is regaining confidence in an imminent resolution to the war in Iran, and the price of oil barrels has reflected this. Investors have appreciated that Iranian authorities are studying a peace proposal, as advanced this Wednesday morning by the North American portal Axios and confirmed by the semi-public agency ISNA. Additionally, they have interpreted the withdrawal of "Project Liberty" by the President of the United States, Donald Trump —an initiative to provide military escort for ships transiting the Strait of Hormuz— as a gesture of goodwill towards the Tehran government.
With peace talks more on track, Brent crude has seen its price cut by more than 7% this Wednesday, falling just above $102 for the first time since April 27. West Texas Intermediate has cooled at the same pace, settling at $95. The drop in crude prices has also given a boost to stock markets, which have climbed again after the plunge last Monday, caused by the banking sector.
The price of a crude barrel, it should be noted, had fallen by nearly 11% during the morning, dropping below the $100 threshold for the first time in over two weeks. The decline moderated, however, after a publication by Trump on his social network, Truth Social, in which he threatened to "start bombing on a much larger scale than has been experienced so far" on Iran if Tehran did not accept the peace terms.
The threat, however, was not severe enough to reverse the price drop, only slowing it down. Iran, for its part, has communicated that it is already reviewing the potential peace agreement proposed by Washington, and has contributed to mitigating the blow from the White House.
The stock market gains momentum
The good oil news helped to boost European stock markets during the day. The Ibex-35 (the benchmark index on the Spanish stock market), at the close of the session, climbed nearly 2.5%, recovering the 18,000 points lost on Monday due to the banking crisis. The trend was replicated in other major markets, with the British FTSE-100 rising by 2.15%. The German Dax 40 revalued by 2.12%, while the French CAC-40 registered the best performance, with an increase of close to 3% at the end of the session.
In the Spanish case, the biggest 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 optimistic economic forecasts, with particular gains for the most internationalized firms, BBVA (+3.5%) and Santander (+4.1%). The trend was reproduced in the European environment, with significant jumps in the heavy industry and aeronautics sectors: Continental, in the German Dax, soared by nearly 9%; while Safran, in France, grew by 8.9%.
The rallies of 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 reduction of close to 4.45%, surpassed only by the plunge of pharmaceutical company Rovi, which fell by 16%. Naturgy and Enagas also closed the day in the red, with modest erosions, less than 1%; while both Iberdrola and Endesa registered slight gains, also below one percentage point.
In the United Kingdom, the worst performer of the day was BP, with a reduction of 3.7%; while in Germany, energy company RWE suffered, losing 1.4%, and in France, TotalEnergies, 3.2%.
