Oil rises as Trump reviews latest Iranian proposal on Strait of Hormuz

LONDON: Oil prices moved higher on Tuesday while stock markets were mixed as US President Donald Trump considered a new Iranian proposal that would reportedly reopen the Strait of Hormuz and bring an end to the eight-week war.

Investors were also preparing for a busy week of central bank decisions and earnings announcements from major Wall Street companies.

Tehran sent written messages to Washington through Pakistan setting out its red lines for peace talks, including positions on its nuclear programme and the future of the strategically important waterway.

The White House said Trump and his team met on Monday to discuss the proposal, but spokeswoman Karoline Leavitt did not say whether the US president would agree to it.

The proposed interim arrangement would see Iran reopen the Strait of Hormuz — a route through which about a fifth of global oil and LNG normally passes — in return for Washington lifting its blockade of Iranian ports. Under the reported plan, more difficult negotiations on Iran’s nuclear programme would be deferred, an issue that remains a major obstacle for Trump.

Expectations for an agreement had strengthened before the weekend, but those hopes weakened after Trump cancelled a planned visit to Islamabad by his envoys Steve Witkoff and Jared Kushner on Saturday.

Iran’s ambassador to the United Nations, Amir Saeid Iravani, told a Security Council meeting that Tehran would require assurances that the United States and Israel would not launch another attack if Iran were to provide security guarantees in the Gulf.

US Secretary of State Marco Rubio said Iran’s position on the Strait of Hormuz fell short of Washington’s requirements.

"If what they mean by opening the straits is, 'yes, the straits are open as long as you coordinate with Iran, get our permission or we'll blow you up and you pay us,' that's not opening the straits," Rubio remarked in an interview with Fox News.

In Russia, President Vladimir Putin told Iranian Foreign Minister Abbas Araghchi during talks in Saint Petersburg that Moscow would do everything possible to help stop the war in the Middle East.

Oil extends gains, equities struggle

Oil prices continued to climb on Tuesday, with Brent moving back toward $110 a barrel, while equity markets came under pressure.

Among Asian markets, Tokyo, Hong Kong, Shanghai and Sydney posted losses, while Seoul, Singapore, Taipei and Jakarta registered gains. The mixed regional performance followed another session in New York in which the S&P 500 and Nasdaq closed at record highs.

IG analyst Tony Sycamore said Iran may be under greater pressure to reach an agreement soon because its ageing storage infrastructure was expected to reach full capacity this week. "If forced shut-ins follow, Tehran risks irreversible long-term damage to its reservoirs and a serious hit to future production and revenue streams."

Sycamore also said that although Iran’s latest proposal was encouraging, it remained difficult to see Washington accepting anything short of a broader agreement. "It is hard to see the US accepting anything less than a comprehensive deal that both opens the Strait of Hormuz and addresses Iran's nuclear weapons programme."

Markets watch central banks and earnings

Attention is also focused on a series of central bank meetings this week. The Bank of Japan was expected to leave interest rates unchanged later on Tuesday. The Federal Reserve, European Central Bank and Bank of England are also expected to keep rates steady as policymakers monitor the risk of renewed inflation driven by higher energy prices.

On the corporate side, technology firms Apple, Meta Platforms and Microsoft are due to report earnings, along with industrial companies including Ford and ExxonMobil.

By the latest readings, West Texas Intermediate was up 1.0 per cent at $97.32 a barrel, while Brent North Sea Crude was also up 1.0 per cent at $109.27 a barrel.

Tokyo’s Nikkei 225 was down 0.5 per cent at 60,238.21, Hong Kong’s Hang Seng Index fell 0.3 per cent to 25,851.82, and Shanghai’s Composite Index slipped 0.2 per cent to 4,079.78.

In currency markets, the euro stood at $1.1718 from $1.1722, the pound at $1.3531 from $1.3534, and the dollar rose to 159.50 yen from 159.39 yen. The euro was at 86.60 pence from 86.61 pence.

In previous trading, New York’s Dow closed down 0.1 per cent at 49,167.79, while London’s FTSE 100 ended 0.6 per cent lower at 10,321.09.