- Markets remained focused on stalled diplomatic talks between Iran and the United States.
- Little progress was reported in negotiations to end the conflict.
- Concerns persisted about Hormuz and possible supply disruption.
Oil prices rose for a third straight day on Wednesday and the dollar nearly surpassed 160 yen as fresh hostilities broke out in the Gulf after peace talks between the United States and Iran stalled.
U.S. crude futures rose about 2% to $95.40 a barrel. The dollar reached 160 yen, then paused as traders became cautious of possible Japanese intervention around that level.
On the supply side, U.S. crude oil inventories fell for the seventh consecutive week last week, according to market sources citing American Petroleum Institute data released Tuesday.
Crude stocks fell 6.8 million barrels in the week ended May 29, the sources said. US government data on reserves will be released on Wednesday at 10:30 am ET (1430 GMT).
Daniel Hynes, senior commodities strategist at ANZ Bank, said any “effort” to reopen the Strait of Hormuz faces challenges as Iran has mined large portions of the vital waterway.
“There has been a slight increase in the number of vessels attempting the voyage, but total transits remain significantly below pre-conflict levels,” Hynes said.
S&P 500 futures fell, although the AI-fueled rally continued in Asia, where stock indexes rose to record levels in Taiwan and Japan. South Korean markets were closed.
US Central Command said Iran fired missiles at Kuwait and Bahrain, which were thwarted or failed, prompting US forces to respond to the Iranian island of Qeshm in the Strait of Hormuz.
Iran’s Revolutionary Guard said it had attacked the headquarters of the US Fifth Fleet. Iran and the United States said last week that they had reached a tentative agreement to stop the war, but the two sides have not yet signed any agreement.
“Last week… the trajectory was towards some sort of memorandum of understanding and the markets were very convinced that was going to happen,” said Chris Weston, head of research at brokerage Pepperstone in Melbourne.
“Things look more precarious now. This suggests that people are coming back to the negotiating table with less room to make it happen and I think we’re seeing some of those bets being undone.”
Cryptocurrencies were falling, with bitcoin now down nearly 10% in three sessions to hit a two-month low of $66,123 on Wednesday.
Still, the topic of artificial intelligence seems immune to war worries and Wall Street stock indexes made small gains overnight, led by AI.
Marvell Technology shares soared 32.5% to an all-time high after Nvidia boss Jensen Huang called the chipmaker the next trillion-dollar company at Computex Week in Taipei.
SpaceX plans to raise $75 billion in a blockbuster initial public offering next week, selling 555.6 million shares at a target price of $135 per share, according to a source familiar with the matter.
Bonds, which had risen through Tuesday, were steady early Wednesday, with the benchmark 10-year U.S. Treasury yield at 4.46%.
Overnight data showed U.S. job openings rose in April to the highest level in five years, pointing to a resilient labor market and offering little evidence the economy needs lower rates.
The US Services ISM will be released later on Wednesday, ahead of Friday’s labor market data.
“In our view, the rebound in momentum across the US economy in early 2026 could push the US jobs report above bearish consensus forecasts,” said Peter Dragicevich, Asia-Pacific currency strategist at payments firm Corpay.
“If realized, we believe this could reinforce the view that the US Federal Reserve could raise interest rates in the future, which in turn could cause the US dollar to strengthen.”
Markets, which expected rate cuts before the Iran war, have priced in about 18 basis points of U.S. rate hikes this year. A rise in Europe next week is all but priced in following data showing inflation accelerated further last month, while traders see around a 75% chance of a June rise in Japan.
Currency markets were broadly stable, with the euro at $1.1627 and the dollar just shy of 160 yen at 159.86.
Australia’s economy slowed in the March quarter, data showed, as a data center boom boosted business investment but also soaked up imports, although the currency held steady at $0.7177.
