European stock markets traded close to flat on Tuesday while crude oil prices advanced, as investors assessed the impact of fresh U.S. military action against Iran that weakened expectations for a near-term peace agreement.
By 07:05 GMT, the STOXX Europe 600 was broadly unchanged. Germany’s DAX declined 0.3%, France’s CAC 40 slipped 0.4%, while the UK’s FTSE 100 rose 0.5%.
Fresh military escalation clouds hopes for peace deal
The U.S. military launched what it called “defensive” strikes in southern Iran, targeting and sinking two vessels belonging to the Islamic Revolutionary Guard Corps that were reportedly attempting to deploy mines in the Strait of Hormuz.
Iran responded by firing missiles at U.S. aircraft, according to reports. The Wall Street Journal later cited a U.S. official saying that further American strikes targeted missile launch systems near Bandar Abbas.
Recent optimism surrounding a potential agreement between Washington and Tehran to end their nearly three-month conflict has since faded. Weekend reports suggested both countries had agreed in principle to a deal, while Donald Trump stated that negotiations were progressing “nicely.” However, Trump also cautioned that fighting could resume and intensify if no agreement is ultimately reached.
Oil recovers as markets monitor Strait of Hormuz developments
Oil prices moved higher, recovering part of Monday’s losses that had followed reports of diplomatic progress aimed at reopening the Strait of Hormuz.
Brent crude futures, the global benchmark, were last trading 2.4% higher at $98.39 per barrel after briefly falling below the $100 level earlier in the week.
Despite the recent pullback, Brent remains significantly above pre-conflict levels of around $70 a barrel, maintaining concerns that elevated energy costs could continue to fuel inflationary pressures globally.
Energy stocks gain while Ferrari slips
European energy companies benefited from the rebound in oil prices, with shares in Eni (BIT:ENI), Repsol (TG:REP) and TotalEnergies (EU:TTE) moving higher.
Elsewhere, Milan-listed shares of Ferrari N.V. (BIT:RACE) fell more than 5% after the company revealed its first fully electric vehicle.
Leave a Reply