Oil prices climb, Asian stocks mixed as investors reassess Middle East ceasefire prospects
"While the headline flow points to a more constructive tone, markets remain unsure which signals to trust and act upon," said an analyst.
A drone view of a pump jack and drilling rig south of Midland, Texas, US, on Jun 11, 2025. (File photo: Reuters/Eli Hartman)
TOKYO: Oil prices climbed on Thursday (Mar 26), recovering some of the previous day's losses as investors reexamined prospects for de-escalation in the Middle East as Iran said it was still reviewing a United States proposal to end the war, which has disrupted energy flows.
Brent futures rose US$1.13, or 1.1 per cent, to US$103.35 a barrel by 12.51am GMT (8.51am, Singapore time), while US West Texas Intermediate crude futures were up US$1.08, or 1.2 per cent, at US$91.40 a barrel.
Both benchmarks slumped more than 2 per cent on Wednesday.
Despite reviewing the proposal, Iran has no intention of holding talks to end the widening Middle East conflict, the country's foreign minister said on Wednesday.
US President Donald Trump will hit Iran harder if Tehran fails to accept that the country has been "defeated militarily", White House press secretary Karoline Leavitt said.
"Optimism regarding a ceasefire has faded," said Tsuyoshi Ueno, senior economist at NLI Research Institute.
He added that the bar set by Washington appeared high, leaving oil prices vulnerable to further volatility depending on negotiations and military actions by both sides.
Trump's 15-point proposal, sent through Pakistan, calls for removing Iran's stocks of highly enriched uranium, halting enrichment, curbing its ballistic missile program and cutting off funding for regional allies, according to three Israeli cabinet sources familiar with the plan.
ASIAN STOCKS MIXED
It was a mixed picture in early Asian trade, with Japan's Nikkei up 0.6 per cent while South Korean stocks were down 1.2 per cent.
MSCI's broadest index of Asia-Pacific shares outside edged 0.23 per cent lower, set for an 8.7 per cent decline in the month, its biggest monthly drop since October 2022.
"While the headline flow points to a more constructive tone, markets remain unsure which signals to trust and act upon," said Chris Weston, head of research at Pepperstone.
"Price action suggests participants expect further twists and turns, even as the probability of a negotiated outcome edges higher."
The conflict has all but halted shipments through the Strait of Hormuz, which typically carries about one-fifth of the world's crude oil and liquefied natural gas supply.
The International Energy Agency (IEA) has called it the biggest-ever oil supply disruption.
India, meanwhile, has bought its first cargo of Iranian liquefied petroleum gas in years after the US temporarily removed sanctions on Tehran's oil and refined fuels, sources said.
Japanese Prime Minister Sanae Takaichi asked IEA chief Fatih Birol for an additional coordinated release of oil stockpiles during talks on Wednesday, as Tokyo seeks to hedge against a prolonged Middle East conflict.
Iraqi oil production has slumped, with storage tanks reaching high and critical levels, three Iraqi energy officials said on Wednesday.
Adding to supply concerns, at least 40 per cent of Russia's oil export capacity is at a halt following Ukrainian drone attacks, a disputed attack on a major pipeline and the seizure of tankers, according to Reuters calculations based on market data.
US crude inventories rose by 6.9 million barrels to 456.2 million barrels in the week ended on Mar 20, the highest since June 2024 and far exceeding analysts' expectations in a Reuters poll for a 477,000-barrel increase.
"If you look at what the US wants to achieve, what Israel wants to achieve, and what Tehran wants to achieve, it will be very hard to reconcile all these points," said Matthias Scheiber, senior portfolio manager and the head of the Multi Asset team at Allspring Global Investments.
"We still think there is a case to make for structurally higher energy prices for the moment."
Fears of an inflationary aftershock from soaring energy prices have pushed traders to price out any chance of a Federal Reserve rate cut this year, lifting the dollar.
Bets on US rate hikes briefly gained traction but have since been pared back.
