Oil prices today: Oil falls as Donald Trump postpones energy attacks

Australian shares gave back strong gains on Wednesday to finish up just 0.2 per cent as initial optimism about a peace deal in the Middle East faded amid reports that the US and Israel had bombed Iranian energy related facilities in Khorramshahr.

Brent crude oil prices topped $US100 again on the news of new strikes in Iran’s Isfahan region, after tumbling 9 per cent overnight on Tuesday to $US97.20 on claims by US President Donald Trump that Washington and Tehran were close to reaching a complete peace deal in weekend talks.

Mr Trump said he had ordered the US military to postpone all military strikes on Iran’s power plants and energy infrastructure for five days because the peace talks had been productive, an assertion disputed by Iran.

He had previously given a 48-hour deadline for Iran to open the Straight of Hormuz or face “obliteration” of power plants.

“While Trump’s announcement has effectively defused the immediate 48-hour “time bomb” ultimatum, the clock has simply been reset for Friday,” said Tony Sycamore a Market Strategist at IG. “That’s the same day the 2200 Marines of the 31st Marine Expeditionary Unit, along with the USS Tripoli and USS New Orleans, are expected to arrive in the Gulf region.

“This realisation, combined with fresh reports of US and Israeli strikes on energy-related buildings in Iran’s Isfahan region, triggered a bounce in crude oil and saw the ASX200 give back a good chunk of its early gains.”

On the ASX mining heavyweights in the iron ore and gold space rebounded, although banks and technology stocks fell again. The market’s 0.2 per cent gain to 8379 points leaves it only slightly above a 10-month low.

Global gas and diesel prices also retreated from highs overnight on Tuesday, before edging higher again over Wednesday’s trading day in Australia. Gold prices rebounded slightly to $US4414 an ounce after a three-week sell-off.

“I am pleased to report the United States of America and the country of Iran, have had, over the last two days, very good and productive conversations regarding a complete and total resolution our our hostilities in the Middle East,” Mr Trump posted to his Truth Social account.

Iranian state media contradicted Mr Trump’s description of conversations, saying direct or indirect talks didn’t take place between Washington and Tehran.

“Headlines have been very choppy since, with many Iranian officials denying that negotiations are taking place while President Trump effectively doubles-down on the claim,” said Westpac on Tuesday morning. “Markets are left striking a balance between welcoming the tentative news of possible de-escalation while weighing the immense uncertainty still clouding this progress. “

On Tuesday, shares on Wall Street jumped in reaction to Mr Trump’s claims that a peace deal is near. The tech-heavy Nasdaq Index rose 1.4 per cent and S&P/500 added 1.2 per cent. However on Wednesday afternoon in Australian, US equity futures markets pointed to more falls at the opening bell on Wall Street.

Share market investors are also worried about an inflation rebound ahead, as the Strait of Hormuz remained closed to virtually all shipping on Wednesday, blocking around 20 per cent of the world’s oil and gas supply.

The war’s destructive effects and what the International Energy Agency called the largest disruption to energy supply in history, have stoked fears about a global inflation shock leading to a recession across the world.

On Wednesday in Australia, monthly consumer price index (CPI) inflation data is due for February in what will be the last reading before the inflationary impact of the Middle East war feeds into data.