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Energy markets rally after Trump rejects Iran truce offer / Photo: Kevin Dietsch - GETTY IMAGES NORTH AMERICA/AFP
Energy markets rally after Trump rejects Iran truce offer
Oil futures surged more than four percent on Monday, alongside gains for natural gas and diesel prices, after US President Donald Trump rejected Iran's offer of a seven-day truce.
High inflation concerns lifted government bond yields as markets bet on the US Federal Reserve hiking interest rates in October after already tightening this month, supporting the dollar.
European stock markets steadied in midday deals after a mixed showing across Asia, with markets also reacting to Washington and Beijing extending their trade truce at the end of last week.
"There was renewed strength in oil prices after comments from President Trump that he had rejected Iran's latest proposal to reopen the Strait of Hormuz," noted AJ Bell investment director Russ Mould.
With no sign of an imminent end to the US-Israel-Iran war, European natural gas prices also won support on Monday, while average diesel prices in the UK hit a record high just shy of two pounds ($2.65) per litre, according to the RAC motoring organisation.
On the downside, "gold prices have slumped from their summer highs as investors have reacted to the stronger dollar -- which makes the metal more expensive for non-dollar buyers", Mould explained.
Iran set out a plan at the United Nations General Assembly last week for a halt in hostilities that would see the Strait of Hormuz reopened, easing a crippling supply crisis that has jacked up global costs.
The waterway is key to the world's energy supply and is now central to the conflict between the US and Iran, particularly with Houthis seizing Yemen's entire Red Sea coast, including the Bab al-Mandab Strait, a vital shipping lane.
Iran was standing by its conditions for reopening the Strait, including the release of frozen assets, the lifting of sanctions on its oil and an end to the United States' naval blockade.
- Key figures at around 1030 GMT -
Brent North Sea Crude: UP 4.1 percent at $108.65 per barrel
West Texas Intermediate: UP 4.2 percent at $96.31 per barrel
London - FTSE 100: UP 0.2 percent at 10,716.42 points
Paris - CAC 40: FLAT at 8,079.88
Frankfurt - DAX: DOWN 0.2 percent at 25,372.68
Tokyo - Nikkei 225: DOWN 0.7 percent at 65,877.62 (close)
Hong Kong - Hang Seng Index: UP 0.5 percent at 24,642.51 (close)
Shanghai - Composite: DOWN 1.7 percent at 3,823.62 (close)
New York - Dow: UP 0.9 percent at 51,828.62 (close)
Euro/dollar: DOWN at $1.1376 from $1.1399 on Friday
Pound/dollar: UP at $1.3259 from $1.3251
Dollar/yen: DOWN at 157.10 yen from 157.20 yen
Euro/pound: DOWN at 85.80 pence from 86.03 pence
burs-bcp/ajb/gil
N.Zimmermann--BlnAP
