Oil prices slide as Trump’s Iran remarks ease supply fears

SINGAPORE: Oil prices fell on Tuesday while global equities wobbled and bond markets steadied after US President Donald Trump said he had paused a planned attack on Iran and signalled there was a “very good chance” of a nuclear agreement.

Brent crude futures dropped nearly 2 per cent to $109.94 a barrel, while U.S. West Texas Intermediate fell 1.54 per cent, as easing geopolitical fears prompted a pullback in energy markets.

Trump said on Monday he had halted a military strike to allow space for negotiations after Tehran sent a new peace proposal to Washington, adding that discussions could lead to a deal preventing Iran from developing a nuclear weapon.

Investor sentiment remained fragile, however, after markets were already rattled by a weekend drone strike in the United Arab Emirates that underscored continuing regional risks despite diplomatic signals.

“We’ve seen a lot of back and forth already,” said IG market analyst Fabien Yip, adding that markets were waiting for concrete developments, particularly regarding safe shipping through the Strait of Hormuz.

“Until we actually see real action… the market in general is shrugging off the commentary from either side,” he said.

Shares mixed as uncertainty lingers

Global equity markets traded unevenly. MSCI’s broad Asia-Pacific index outside Japan fell more than 1 per cent, while Japan’s Nikkei slipped 0.3 per cent and South Korea’s Kospi dropped over 3 per cent. Chinese blue-chip shares also declined.

U.S. futures turned lower after early gains, with Nasdaq futures down 0.5 per cent and S&P 500 futures off 0.3 per cent. European futures showed mixed moves, reflecting cautious sentiment across regions.

Markets also turned their attention to upcoming earnings from chip giant Nvidia, seen as a key test for the artificial intelligence-driven rally in global equities.

Bonds steady after selloff

Government bond markets stabilised after an earlier selloff driven by inflation concerns linked to the Middle East conflict.

Benchmark 10-year U.S. Treasury yields eased to 4.6034 per cent in Asian trade, retreating from more than one-year highs, while Japanese government bond yields also pulled back across the curve.

Analysts said concerns over prolonged energy-driven inflation were still present, but some of the immediate pressure had eased as oil prices fell.

Yen watched as dollar holds gains

In currency markets, the U.S. dollar held firm at 158.99 yen, keeping traders alert for possible intervention from Tokyo as the Japanese currency remains under pressure.

The euro and sterling also weakened slightly against the dollar, reflecting broad safe-haven demand for the greenback amid geopolitical uncertainty.

Gold prices eased as higher bond yields weighed on non-yielding assets, though markets remained sensitive to further escalation risks in the region.