Oil prices drop, global stocks rally on US-Iran peace deal

Oil prices drop, global stocks rally on US-Iran peace deal

Positive effects have begun to ripple through the global economy following the announcement of a ceasefire and a historic peace deal between the United States and Iran. News of the end of a four-month-long conflict has brought relief to international financial markets, with oil prices falling and major stock exchanges seeing significant gains.

At the start of trading on Monday, June 15, Asia-Pacific stock markets showed strong upward momentum. Japan's Nikkei 225 index rose by 5.5 per cent. South Korea's Kospi index surged nearly 5.7 per cent. Taiwan's Taiex index gained 2.7 per cent, while Australia's ASX-200 was up about 1.5 per cent. Hong Kong's Hang Seng index also rose nearly 1 per cent at the open.

US stock markets also reflected the optimism, with S&P 500 futures rising 1 per cent and tech-heavy Nasdaq futures climbing 1.8 per cent before regular trading began.

"The market had been reacting positively since President Donald Trump hinted at the deal's finalisation late last week, and investor confidence has only grown following the formal announcement," said Khoon Goh, head of Asia research at ANZ.

Following the peace deal announcement, international oil prices fell sharply. Brent crude dropped about 4.5 per cent, falling below $83.40 per barrel.

On Sunday, Trump announced the deal on his Truth Social platform and ordered the lifting of the blockade imposed on the Strait of Hormuz. "Ships of the world, start your engines. Let the oil flow," he wrote.

According to the International Energy Agency (IEA), the closure of the Strait of Hormuz had disrupted the supply of about 14 million barrels of oil per day, driving up global energy prices. The announcement of the blockade's lifting has brought relief to the markets in anticipation of improved conditions.

Economists say lower oil prices could help ease inflationary pressures worldwide, a positive signal for central banks.

However, maritime transport experts believe it will take time for shipping through the Strait of Hormuz to fully return to normal.