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Oil Prices Ease as Trump Says Iran Is in Talks With US
Trump Says He Is Postponing Attacks on Iranian Power Plants for Five Days
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NEW YORK — Relief is ripping through financial markets March 23 afterPresident Donald Trumpsaid theUnited States has talked with Iranabout a possible end totheir war. Oil prices are easing, and stock prices are jumping on Wall Street following severe losses elsewhere in the world before Trump’s announcement.
The price for a barrel of Brent crude fell 12.5% to $98.19, down fromnearly $120 at one point last week, after Trump said the United States and Iran held productive talks the last two days “regarding a complete and total resolution of our hostilities in the Middle East.” The S&P 500 leaped 2% and was flirting with its best day since last summer following the step down in tensions, even though Iran denied such talks took place.
Over the weekend, Trump had threatened to “obliterate” Iran’s power plants if it doesn’t open up theStrait of Hormuzwithin 48 hours. The strait has become asore point for Trumpand the economy because its near-closure has prevented oil tankers from leaving the Persian Gulf to supply customers around the world.
Trump said March 23 that he is postponing attacks on Iranian power plants for five days to allow talks to continue. Still, caution remains, and the optimism in financial markets was measured. Iranian state media cited Iranian officials as denying any talks like Trump described and said Trump had backed down “following Iran’s firm warning.”
Turkey and Egypt said they had spoken to the warring parties in a potentially encouraging signal.
The price of Brent crude fell as low as $96 immediately after Trump announced the postponement, but it quickly recovered a chunk of that loss. Benchmark U.S. crude had a similar reaction, immediately dropping toward $84 per barrel before yo-yoing back above $92 and then falling back to $86.91.
Financial markets have hadvicious swings,both up and down, since the war began because of uncertainty about how long it may last. The fear is that a long-term war could keep so much oil and natural gas off global markets that it creates a debilitating wave of inflation for the global economy.
The frenzied swings of the past few weeks are similar to, though not asdramaticas, those that hit last year when Trump shocked the global economy on “Liberation Day.” Many of his worldwide tariffs ended up being milder than he initially threatened, and the back-and-forth in negotiations led to historic moves up and down.
Still, the March 23 overriding reaction in financial markets was one of relief. The Dow Jones Industrial Average was up 1,032 points, or 2.3%, as of 11:30 a.m. Eastern time. It had soared nearly 1,135 points during the morning. The Nasdaq composite jumped 2.3%.
In Europe, stock indexes immediately flipped from losses to gains following Trump’s announcement and then held onto them. France’s CAC 40 leaped 2.4%, and Germany’s DAX returned 3.1%.
That compares with sharp drops for Asian stock markets, which finished trading before Trump made his announcement. South Korea’s Kospi careened 6.5% lower, Japan’s Nikkei 225 dropped 3.5% and Hong Kong’s Hang Seng fell 3.5%.
Treasury yields also eased in the bond market following Trump’s announcement. High Treasury yields anddisruption in the bond marketwere main factors that Trump named a year ago when he backed off his initial threats for global tariffs. The moves caused critics to allege Trump always chickens out, or “TACO,” if financial markets show enough pain.
Like oil prices, Treasury yields still remain well above where they were before the war began, even after the March 23 drop. The worry is that high oil prices could keep the Federal Reserve and other central banks from resuming their cuts to interest rates, which would give the global economy and prices for investments a boost.
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The yield on the 10-year Treasury fell to 4.32% from 4.39% late March 20. But it remains solidly above its 3.97% level from just before the war.
On Wall Street, the March 23 rally was so widespread that nearly nine out of every 10 stocks rose within the S&P 500.
At the head were companies with big fuel bills that will benefit from any easing of oil prices. Norwegian Cruise Line Holdings surged 9.1%, while United Airlines climbed 6%, and American Airlines rose 5.6%. All, though, are still down for the year so far.
Stocks of smaller companies also led the market, and the Russell 2000 index of smaller stocks jumped a market-leading 3.5%. It had dropped last week to 10% below its record, a sharp enough fall that professional investors call it a “correction.”
The S&P 500, which is the main measure of the U.S. stock market’s strength, pulled back within 5% of its own all-time high set early this year.
AP Business Writers Yuri Kageyama, Matt Ott and Chan Ho-him contributed.
