Global oil markets saw a sharp decline on Tuesday as investors focused on the possibility of renewed diplomacy between the United States and Iran, even as geopolitical tensions remained high. Brent crude fell by 2.7% to $96.66 per barrel, while US crude dropped 3% to $96.13, slipping below the $100 mark.
The decline came despite Washington’s continued military pressure, including a blockade of Iranian ports following unsuccessful weekend negotiations. Market sentiment, however, remained optimistic. Reports suggest that both Washington and Tehran are still open to dialogue, raising hopes for a potential agreement. US President Donald Trump claimed that Iran had reached out expressing willingness to negotiate, though this has not been independently confirmed.
Analysts noted that financial markets are currently driven more by expectations of a deal than actual outcomes.
This optimism pushed Asian equities higher, with major indices across Japan and South Korea gaining over 2%, while broader Asia-Pacific markets also advanced. In global markets, futures indicated stability, supported by gains on Wall Street. At the same time, the US dollar weakened to a one-and-a-half-month low as investors shifted away from safe-haven assets toward riskier investments.
Currency markets reflected this trend, with the euro and British pound posting modest gains. Meanwhile, US Treasury yields remained largely steady, suggesting cautious optimism among investors.
Experts warn, however, that underlying economic risks persist. While hopes of a US-Iran agreement are supporting markets for now, concerns about a deteriorating global economic outlook could trigger renewed volatility.
The recent surge in energy prices has also raised inflation concerns, prompting expectations that major central banks may consider interest rate hikes instead of earlier projections for rate cuts.In commodities, gold prices rose by 0.7% to $4,771.81 per ounce, indicating that some investors continue to hedge against uncertainty despite the broader risk-on sentiment.
