Is a de-escalation on the horizon?
Ceasefire in Iran: Oil prices plummet
Following the announcement of a two-week ceasefire in the Iran conflict, oil prices—which had recently risen sharply—have dropped significantly. Currently, these prices are the most important indicator of inflation and economic concerns in the market.
The Strait of Hormuz is of enormous importance for global oil and gas trade. Due to the war, the strait had effectively been blocked by Iran, causing oil prices to rise dramatically. According to Iranian Foreign Minister Abbas Araqchi, safe passage is now to be guaranteed for two weeks.
The price of a barrel (159 liters) of North Sea Brent crude for June delivery plummeted by about 16 percent to approximately $92 (about €79)—the lowest level since mid-March. For WTI, the grade more important to the U.S. market, the price drop for May delivery was similar.
IATA Chief: Recovery in KeroseneSupplyCould Take Months
Even after the Strait of Hormuz reopens following the two-week ceasefire in the Iran conflict, it will take months for kerosene supplies to recover, according to the International Air Transport Association (IATA). While he expects crude oil prices to fall, IATA Chief Willie Walsh stated on Wednesday in Singapore. However, the cost of jet fuel is likely to remain at a slightly elevated level due to the impact on refineries. This applies not only to kerosene but also to other products.
Stock Market: “Gift from Pakistan”
The Vienna stock market opened very strongly on Wednesday. Shortly after the market opened, the domestic benchmark index ATX gained a whopping 3.78 percent to 5,649 points.
The top performer in the prime market segment of the Vienna Stock Exchange was Do&Co stock, which surged by a strong 17 percent. FACC shares climbed nearly 11 percent. Wienerberger and voestalpine shares posted gains of more than 9 percent. AT&S, KapschTrafficCom, Palfinger, Raiffeisen Bank International, and RHI each gained more than 6 percent.
Weighed down by weak oil prices, however, OMV shares slipped nearly five percent. Shares of energy providers EVN and Verbund also fell, with declines of 1.2 percent and four percent, respectively. Stock prices also rose noticeably on the leading European stock exchanges.
Strait of Hormuz Opened
Iran and the U.S. agreed to a ceasefire shortly before the expiration of an ultimatum issued by U.S. President Donald Trump. Trump had threatened severe attacks on Iran’s energy sector should an agreement not be reached and the Strait of Hormuz not be opened by 2:00 a.m. German time on Wednesday. Shortly before the deadline expired, both sides announced the agreement on the ceasefire.
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