Oil prices rose by more than one per cent on Tuesday as hopes for a quick reopening of the Strait of Hormuz weakened, while Asian stock markets mostly declined amid concerns over rising inflation and further US interest rate hikes.
Brent crude gained 1.5 per cent to $106.87 a barrel, while West Texas Intermediate rose 1.4 per cent to $93.85.
The gains came as diplomatic efforts to ease the conflict between the United States and Iran showed little sign of progress. Iran’s Foreign Minister, Abbas Araghchi, is expected to meet Qatari representatives as Tehran considers conditions for reopening the strategic waterway.
The Strait of Hormuz is a major route for global oil and gas shipments, making its continued closure a source of concern for energy markets. The Iran-backed Houthis have also seized Yemen’s Red Sea coast, including the Bab al-Mandab Strait, adding to shipping risks.
The prolonged disruption has raised concerns about further increases in fuel costs and inflation. Average UK diesel prices have already reached a record high, according to motoring organisation RAC.
Asian equities also came under pressure, with markets in Tokyo, Seoul, Hong Kong, Mumbai, Singapore, Taipei, Wellington, Jakarta and Manila closing lower. Shanghai and Sydney recorded gains.
The Hang Seng fell 0.3 per cent, while Tokyo’s Nikkei 225 dropped 0.6 per cent. Shanghai’s Composite Index gained 0.2 per cent.
Wall Street’s three major indices also closed lower on Monday as investors assessed the prospect of higher US interest rates.
Markets are pricing in another rate hike by the US Federal Reserve at the end of October, with traders awaiting inflation and employment data that could influence the central bank’s decision.
Gold remained around $4,140 after suffering a sharp fall on Monday, as expectations of higher interest rates reduced the appeal of the non-interest-bearing asset.
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