World shares mostly retreated and oil prices jumped on May 18 after U.S. President Donald Trump warned Tehran that the “clock is ticking” as U.S.-Iran negotiations over a permanent end to the war stall.
Oil prices rose after Trump warned Iran in a social media post that “the Clock is Ticking, and they better get moving, FAST, or there won’t be anything left of them” following a call with Israeli Prime Minister Benjamin Netanyahu.
Trump has set deadlines for Iran and then backed off, so investors have remained cautious about the situation in the Strait of Hormuz and how it is impacting global energy flows, including oil and gas. The strait is still mostly closed, and the U.S. has also imposed its own sea blockade on Iranian ports since last month.
A drone strike over the weekend on a United Arab Emirates’ nuclear power plant added to worries over a potential escalation in the conflict.
Brent crude, the international standard, gained 0.7% to $110.05 per barrel. It was trading at roughly $70 a barrel in late February before the start of the Iran war. Benchmark U.S. crude was trading 1% higher to $106.49 per barrel.
The pair also noted that the oil market was reacting to the lack of tangible results on the Iran war after last week’s widely watched summit between Trump and Chinese President Xi Jinping in Beijing, even as the White House said both the U.S. and China had agreed that the Strait of Hormuz must remain open.
U.S. officials had hoped that Beijing could use its influence, given its economic ties with Iran, to help broker a peace agreement and reopen the strait. Trump said last week in an interview that Xi told him China “would like to be of help” in negotiating an end to the war. So far it's been unclear how Beijing might do that.
U.S. futures fell and markets in Japan and South Korea pulled back from their records. In early European trading, Britain's FTSE 100 edged up 0.1% to 10,205.31. France's CAC 40 lost 0.9% to 7,883.42, and Germany's DAX dropped 0.1% to 23,925.82.
