Oil price plunges to lowest since start of Iran war
Oil prices fell to the lowest level since the early days of the Iran war yesterday as hopes of a peace deal that will end the conflict grew.
Stock markets rallied and government borrowing costs also fell as reports surfaced of a proposed memorandum between Iran and the US.
Global benchmark Brent crude fell to less than $86 a barrel, its lowest level since early March, before partly rebounding to more than $87.
Brent has surged from just $72 before the war began to as high as $126 in April after the conflict resulted in oil and gas supplies from the Middle East being choked off.
Peace sells but who’s buying? Donald Trump has stoked hopes of a deal with Iran
That has had huge knock-on effects, slowing global growth and stoking inflation.
Prospects of a deal to end the conflict and ease those pressures have repeatedly caused excitement on markets over past weeks only to end in disappointment.
However, investors still seized on the latest developments to send the FTSE 100 surging 1.6 per cent, or 167.8 points, higher to 10,471.7.
Germany’s Dax and France’s Cac 40 each climbed by nearly 2 per cent. Stocks were also higher in the US.
And the prospect that inflation pressures could start to ease sent bond yields lower. Yields on ten-year UK bonds, known as gilts, fell to less than 4.8 per cent, the lowest since 20 April.
Dan Coatsworth, head of markets at AJ Bell, said: ‘Investors were in a buoyant mood as hopes of a peace deal between the US and Iran were revived, having seemingly dropped off the table earlier in the week.
‘The maxim “once bitten, twice shy” isn’t being applied by the market when it comes to Donald Trump’s pronouncements, as his latest of several suggestions a deal is close has helped to drive stocks higher once more.’
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