Oil clawed back above $97 a barrel Thursday as investors bet the US-Iran ceasefire will not last, and the near-shut Strait of Hormuz is doing little to convince them otherwise.
European markets opened lower on Thursday while oil climbed back up again as investors grow increasingly sceptical that the fragile two-week US-Iran ceasefire will hold.
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The DAX dipped 0.3% with Siemens Energy among the fallers, down 1.2%.
The FTSE 100 slipped 0.2%, while the Euro Stoxx 50 and CAC 40 each lost around 0.3%, with LVMH weighing on both indexes, off 2% by 9:03 am CET.
Oil prices rebounded on Thursday, shaking off an earlier plunge triggered by the announcement of a two-week ceasefire between Washington and Tehran.
Brent crude, the international benchmark, climbed 2.4% to $97.02 per barrel. Benchmark US crude was up 3.3% to $97.50 a barrel, in a swift reversal after both contracts briefly dipped below $92 following Tuesday's ceasefire announcement.
Iran has so far kept the Strait of Hormuz largely closed despite repeated US demands to reopen it.
The waterway, through which roughly a fifth of the world's oil typically passes, remains a critical pressure point and its continued closure sent a clear signal that the ceasefire is far from a done deal.
Israeli strikes on Lebanon that killed and injured hundreds added to the anxiety, casting fresh doubt over whether the broader regional conflict was genuinely cooling.
Asia sells off as Wall Street euphoria fades
Asian markets took a largely pessimistic view. Tokyo's Nikkei 225 dropped 0.9% while South Korea's Kospi lost 1.6%.
Hong Kong's Hang Seng fell 0.4% and the Shanghai Composite slipped 0.7%. Australia's S&P/ASX 200 and Taiwan's Taiex each edged 0.1% lower. US futures were also marginally in the red.
The mood was a stark contrast to Wednesday's Wall Street session, when markets surged on the ceasefire news.
The S&P 500 jumped 2.5%, the Dow Jones Industrial Average rose 2.9% and the Nasdaq composite gained 2.8%.
Travel stocks led the rally — United Airlines surged 7.9%, American Airlines rose 5.6%, and cruise operator Carnival jumped 11.2%, partially recovering losses accumulated since the Iran war began driving fuel costs higher.
Peace talks loom
Talks aimed at securing a permanent end to the conflict could begin as soon as Friday in Pakistan.
US Vice President JD Vance is expected to lead the American negotiating team.
Whether the ceasefire can survive until then, with the Strait of Hormuz still choked and Israeli strikes continuing, is another matter.
Gold fell 0.7% to $4,743.20 an ounce and silver dropped 1.6% to $74.18 per ounce, as some of the safe-haven premium unwound on ceasefire optimism — though that optimism is looking increasingly shaky.
The dollar edged up to 158.66 yen from 158.57, while the euro rose slightly to $1.1668.
