Stocks climb as oil retreats, Fed calms inflation fears

The conduit, even more important since the effective closure of the Strait of Hormuz by Iran, was shut last week after being targeted by Yemen’s Iran-backed Houthis.

“Saudi Arabia eased supply fears by offering additional crude to Asian refiners via ship-to-ship transfers off Oman’s Sohar port, while working to restore roughly half of the damaged East-West pipeline’s capacity within days,” said Ipek Ozkardeskaya, an analyst at Swissquote.

Oil prices fell sharply early in the day, then staged a partial recovery with Brent oil futures finishing down one percent at US$104.82 per barrel.

Analysts at JPMorgan Chase no longer have a “baseline view” of where the market goes next in light of the US administration’s willingness to live with US$100 oil and other pain points that were initially seen as red lines that would prompt a US accord with Iran to reopen the Strait by June.

“Six months later, many of those lines have been crossed, yet the exit strategy is less clear, not more,” wrote JPMorgan analysts.

“With no clear signals from either the US or Iran that they are prepared to de-escalate – and absent a diplomatic breakthrough on Sep 24, when President Trump and President Xi are set to meet in DC – the assumption that the disruption is temporary is becoming increasingly difficult to sustain.”

Stocks in London rose after the Bank of England kept its benchmark interest rate steady as expected, as it tries to support economic growth despite rising energy costs.

The Bank of Japan is widely forecast to raise interest rates Friday as it looks to fend off high inflation and a weaker yen.