US and Iran Sign Framework to End War, Boosting Markets

US and Iran Sign Interim Peace Agreement, Oil Prices Decline

The US and Iran have signed an interim peace agreement, which has led to a decline in oil prices. The agreement was announced on Wednesday morning, resuming a slide that had been interrupted by US President Donald Trump’s warning of potential military action.

As a result, Brent crude fell 1.9 percent on Thursday morning in Asia, returning the international benchmark to almost exactly where it was 24 hours previously. The price of Brent futures for delivery in August stood at $78.07 as of 04:30 GMT, which is about 7 percent lower than before the US launched its military campaign against Iran on February 28.

The agreement has led to a surge in Asian stock markets, with Japan’s benchmark Nikkei 225 and South Korea’s Kospi both reaching all-time highs. Taiwan’s Taiex also rose as much as 1.3 percent. However, Hong Kong’s Hang Seng Index fell 1.7 percent.

US stock futures climbed, with those tied to the S&P 500 and Nasdaq Composite rising about 0.8 percent and 1.3 percent, respectively. Pakistani Prime Minister Shehbaz Sharif, who mediated the negotiations between Washington and Tehran, announced that the US-Iran memorandum of understanding (MoU) had entered into force with “immediate effect”.

The agreement has led to a reduction in shipping traffic through the Strait of Hormuz, which has been reduced due to the threat of Iranian missiles, drones, and mines. Shipping companies have expressed concerns about the lack of clarity on how to ensure the safety of their vessels and crews in the channel.

The Baltic and International Maritime Council (BIMCO) stated that the US and Iran had yet to provide information about “key aspects such as timings and safe routes”. The organization advised shipowners to continue doing thorough risk assessments and appealed to all parties to prioritize the safety of seafarers.

Source: Al Jazeera