- Tenders underway to ensure safe passage through the Strait of Hormuz.
- Donald Trump wants nations to secure the Strait of Hormuz.
- Stock markets remain under pressure due to the war.
Oil prices hovered around $100 a barrel on Monday and stocks fluctuated as the Iran war entered its third week, with both sides showing no signs of backing down and diplomats trying to ensure the safe passage of tankers through the crucial Strait of Hormuz.
Crude surged in the first minutes after the U.S. president said over the weekend that forces attacked military targets on Kharg Island, a brushy stretch of land in the Gulf that handles nearly all of Iran’s oil exports.
He also warned that attacks could extend to energy infrastructure if Tehran interferes with transit through Hormuz, which has been effectively closed since operations between the United States and Israel began on February 28.
Iran’s Fars news agency reported shortly afterward that no oil infrastructure was damaged in the attacks.
Trump urged other countries to send warships to keep the waterway open, but offered no details or commitments from the United States, saying he expected China, France, Japan, South Korea and the United Kingdom to participate.
He later wrote Saturday in a Truth Social post: “The countries of the world that receive oil through the Strait of Hormuz must take care of that passage, and we will help, A LOT!
“This should always have been a team effort, and now it will be.”
However, Japan said on Monday that it is “not currently considering launching a maritime security operation,” while Australia announced it would not send any navy ships to the region.
Trump said Tehran wanted a deal to end the fighting but was not prepared to reach one under current terms, without elaborating.
Iran’s Foreign Minister Abbas Araghchi said his country was not interested in talks with Washington.
“We don’t see any reason why we should talk to the Americans, because we were talking to them when they decided to attack us,” he told CBS’ “Face The Nation” in an interview broadcast Sunday.
“There is no good experience talking to Americans,” adding that “we have never asked for a ceasefire, and we have never even asked for negotiation.”
However, he said he was willing to talk to countries “that want to talk to us about the safe passage of their ships.”
“I can’t name any country in particular, but several countries have approached us” seeking that safe passage, he added.
Meanwhile, traders hoping for a quick end to the conflict were disappointed after Trump’s top economic adviser, Kevin Hassett, said the Pentagon estimates it could take up to six weeks, although the operation was ahead of schedule.
The two main crude oil contracts advanced. Brent jumped around three percent to $106.50 before paring gains, while West Texas Intermediate settled around $99.
And as concerns grew about a possible energy crisis that could hit the global economy, stock markets remained under pressure.
Tokyo, Shanghai, Sydney, Seoul, Wellington, Manila and Jakarta fell, although Hong Kong, Singapore and Taipei rose.
“Stocks may welcome any sign that Hormuz could reopen, but as there are still threats of new strikes and diplomacy is still patchy, conviction is low,” said Charu Chanana of Saxo Markets.
Adding to the economic concerns was data Friday showing that U.S. gross domestic product in the fourth quarter expanded 0.7%, much slower than the initial reading of 1.4%.
And delayed figures showed that the Federal Reserve’s preferred inflation gauge fell to 2.8% in January before energy prices soared.
“The weekend’s events, while no more disconcerting than those at the end of last week, offer no obvious pretext for a less pessimistic start to the new trading week,” warned Ray Attrill of National Australia Bank.
Monetary policy meetings are also scheduled this week at seven major central banks, including the Federal Reserve, the Bank of England and the European Central Bank.
While they are expected to hold firm on interest rates, any comments on the impact of the war on their respective economies will be closely watched.
