Concerns over energy crisis ease slightly as stocks rebound modestly amid Middle East conflict
While US war secretary Pete Hegseth said Tuesday would mark the “most intense day” of US strikes in Iran since the conflict began almost two weeks ago, President Donald Trump had said on Monday the war would end “very soon”.
As of last night, oil prices had fallen significantly in the previous 48 hours.
Brent crude hit as much as $119 a barrel on Monday, but declined to just under $88 on Tuesday. It fell more than 11pc on Tuesday alone.
Gold was still trading at elevated levels, however, with the spot price edging 1.8pc higher to $5,228 an ounce as the dollar weakened further. Gold is 81pc higher than a year ago.
EU leaders were set to discuss competitiveness, including energy prices, on a call with German chancellor Friedrich Merz, Italian prime minister Giorgia Meloni, Belgian prime minister Bart De Wever and others.
The current Middle East crisis gives a stark reminder of the vulnerabilities this creates
European governments are on edge about the prospect of a repeat of the energy crisis they faced in 2022 after Russia launched its full-scale invasion of Ukraine and prices surged to record peaks. That forced some industries to shut down operations.
Even before the Iran crisis, European energy prices were typically higher than those in the US and China, and Brussels policymakers were facing calls from industry to step in with emergency measures.
“For fossil fuels, we are completely dependent on expensive and volatile imports, putting us at a structural disadvantage to other regions,” said European Commission president Ursula von der Leyen, adding that the reduction in nuclear energy had been a strategic mistake in Europe. “The current Middle East crisis gives a stark reminder of the vulnerabilities this creates.”
Investors bet that the Iran crisis could be passing its peak.
Ryanair stocks rose 3.2pc. Photo: PA
The pan-European Stoxx 600 index rose 1.8pc near the end of the trading session on Tuesday. It had been 2.3pc higher early in the session.
Financial stocks and those of travel companies, which have been hit hard by the conflict, staged strong comebacks.
The Ftse-100 was 1.6pc higher while Germany’s Dax rose 2.2pc.
The Ftse-100 is still under water since the Israeli-US strikes were launched on Iran and US stocks
The Cac-40 in Paris advanced 1.8pc and Spain’s Ibex-35 soared 3pc. In Ireland, the Iseq-20 was 2.8pc higher.
Ryanair jumped 3.2pc, while AIB gained 4.1pc. Bank of Ireland was almost 5pc higher. Kingspan was up nearly 1.9pc.
But AJ Bell’s head of markets, Dan Coatsworth warned that stock markets are “not out of the woods yet”.
“The Ftse-100 is still under water since the Israeli-US strikes were launched on Iran and US stocks, which haven’t fallen as far or as fast as their European counterparts since the crisis began, were wavering in early trading before making some modest progress,” he added.
“Warnings from the Saudi Aramco CEO of ‘catastrophic consequences’ if the conflict drags on did little to dial down the temperature.”
European Central Bank policymakers have recently warned that a prolonged conflict could push up living costs, while extreme volatility in energy markets risks clouding the outlook for interest rates.
Additional reporting: Reuters
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