Oil prices soar as US and Iran locked in costly standoff

World shares were mixed on Monday, as Brent crude oil prices rose by $2.50 a barrel early in the day, while talks on ending the war between the US and Iran remained stalled.

Oil prices have risen sharply since the war began due to disruptions to shipping through the Strait of Hormuz.

On Monday, Brent futures were up more than 1% at $106.47 a barrel, having initially traded near a multi-week high of $108.50 hit earlier in the session.

“It may be that expectations of a diplomatic breakthrough were too weak to begin with, and markets are now in wait-and-see territory ahead of a heavy week of earnings and economic touchpoints,” said Darren Nathan, head of equity research at Hargreaves Lansdown.

With energy prices higher, the U.S. Federal Reserve is expected to keep interest rates unchanged on Wednesday, followed by the European Central Bank and the Bank of England making similar decisions, which analysts believe will keep stock prices bullish.

Markets in London, Paris and Frankfurt advanced despite higher oil prices and a lack of progress in talks. US futures were broadly steady before trading.

Asian markets showed a mixed performance on Monday, with Tokyo and Seoul benefiting from a technical rally, while Hong Kong slipped.

Investors also looked forward to earnings this week from US tech giants Alphabet, Meta, Microsoft, Amazon, and Apple.

“Investors have been encouraged by the corporate news flow over the past few weeks, which has pushed equity prices higher,” said Russ Mould, investment director at AJ Bell.

However, he also said, “Prolonged high oil spells trouble for inflation, which in turn could create a headwind for the economy.”

CBS/AFP