Global oil prices surged on Thursday while major stock markets slipped as uncertainty deepened over peace negotiations between the United States and Iran following weeks of escalating military tensions in the Middle East.
Crude prices climbed sharply after hopes for a diplomatic breakthrough weakened when Tehran rejected Washington’s proposal aimed at ending the nearly month-long conflict.
The latest market volatility came after Donald Trump, President of the United States, earlier announced that planned strikes targeting Iranian energy infrastructure would be postponed allowing room for negotiations. His remarks initially boosted investor optimism and lifted global equities earlier in the week.
However, fresh signals of disagreement between both sides quickly dampened that optimism, pushing oil prices higher and triggering declines across global stock markets.
A major factor driving the oil rally is the growing uncertainty surrounding the Strait of Hormuz, one of the world’s most critical energy transit routes.
Roughly 20 percent of global oil and liquefied natural gas shipments pass through the narrow waterway, which connects the Persian Gulf to international markets. Reports of disruptions and restrictions around the strait have heightened fears of supply shocks.
As a result, Brent crude climbed above $106 per barrel, while West Texas Intermediate (WTI) hovered around $93 per barrel, representing gains of more than three percent during the trading session.
Market analysts say traders are increasingly pricing geopolitical risk into energy markets as the possibility of a prolonged conflict remains.
“The market rollercoaster continues, said Joshua Mahony, chief market analyst at Scope Markets, describing the sharp swings driven by shifting geopolitical signals.
Global stock markets retreat
While oil rallied, stock markets across Europe and Asia recorded notable declines as investors moved cautiously amid rising geopolitical uncertainty.
Major European indices dropped during midday trading:
- London’s FTSE 100 fell more than 1.1 percent
- Frankfurt’s DAX declined 1.2 percent
- Paris’ CAC 40 slipped 0.8 percent
Asian markets also closed lower earlier in the day, reflecting similar concerns.
The Hang Seng Index in Hong Kong dropped nearly 1.9 percent, while Shanghai’s Composite Index fell 1.1 percent. In Japan, the Nikkei 225 posted a modest decline of 0.3 percent.
Analysts say investors remain uncertain about whether diplomatic efforts can produce a meaningful de-escalation in the coming days.
According to Jim Reid, an economist at Deutsche Bank, conflicting signals from both governments have raised doubts about whether a resolution is imminent.
Recent statements are raising questions about whether there is really an off-ramp to the conflict in the days ahead,” Reid said in a market note.
Reports indicate that the United States presented Iran with a 15-point proposal designed to end the conflict and stabilise the region. However, Iranian authorities reportedly responded with their own five conditions for a ceasefire.
Iranian Foreign Minister Abbas Araghchi stated that Tehran does not intend to engage in direct negotiations with the current administration in Washington.
Meanwhile, Ishaq Dar, Foreign Minister of Pakistan, confirmed that indirect negotiations between the United States and Iran are ongoing, with Islamabad acting as an intermediary channel between the two sides.
Despite the diplomatic engagement, analysts say Iran could continue to leverage pressure on global energy supplies to strengthen its negotiating position.
Charu Chanana, a strategist at Saxo Markets, noted that disruptions to energy flows and shipping routes remain one of Tehran’s most significant sources of leverage.
Pressure on energy prices, shipping flows and broader financial conditions remains one of the few meaningful sources of leverage Iran retains, Chanana said.
The geopolitical crisis is already beginning to ripple through the global economy.
The Organisation for Economic Co‑operation and Development (OECD) on Thursday downgraded its growth forecast for the eurozone and warned that rising energy prices could push inflation higher in 2026.
In Germany, Europe’s largest economy, consumer confidence has also weakened ahead of April as households brace for the potential impact of rising fuel and energy costs.
France, which currently holds the presidency of the Group of Seven (G7), is expected to host a high-level meeting next week bringing together finance ministers, energy officials and central bank governors to address the growing crisis.
Adding to the concern, Ngozi Okonjo‑Iweala, Director-General of the World Trade Organization, warned that the global trading system is facing its most serious disruptions in nearly eight decades.
She cautioned that escalating geopolitical tensions and supply chain disruptions could significantly slow global trade and economic growth if the crisis persists.
Financial markets are expected to remain volatile in the coming days as investors closely monitor developments in the Middle East and diplomatic efforts to resolve the conflict.
Energy traders in particular are watching for any sign of further disruption to oil supply routes, especially around the strategic Strait of Hormuz.
For now, analysts say global markets will continue to react sharply to every new development in the fragile and unpredictable standoff between Washington and Tehran.
