Oil rebounds as markets track Iran-Israel ceasefire

BSS

Published On: 25 Jun 2025, 20:52

LONDON, June 25, 2025 (BSS/AFP) - Oil prices recovered as stock markets
diverged Wednesday while traders assessed whether the Israel-Iran ceasefire
would endure.

Focus was also on a NATO summit that signed off on a sharp increase to
military spending by the United States and its allies.

The dollar recovered mildly, having slumped Tuesday after Federal Reserve
boss Jerome Powell did not rule out the prospect of cuts to US interest
rates, as President Donald Trump's tariff war risks slowing the economy.

"Optimism about the fragile ceasefire holding between Iran and Israel has
bubbled through markets... but more doubts are now creeping in about the
truce holding," said Susannah Streeter, head of money and markets at
Hargreaves Lansdown.

Trade Nation analyst David Morrison said that "Investors are mindful that the
current ceasefire may break down, although that seems like a small risk for
now."

Asian stock markets closed higher following rallies on Wall Street and in
Europe on Tuesday on news of the ceasefire declared by Trump.

But European stocks dipped, and Wall Street opened mixed.

The world's main oil contract, Brent North Sea crude, rose 0.6 percent
Wednesday after tumbling almost seven percent Tuesday.

Brent and the main US crude contract, WTI, had soared Monday in the first
reaction to the US bombing of Iran.

Trump said Wednesday that the US strikes resulted in the "total obliteration"
of Iran's nuclear capabilities, setting the country's atomic programme back
by "decades".

"They're not going to be building bombs for a long time," he said, adding
that the ceasefire between Israel and Iran was going "very well".

But leaked US intelligence cast doubt on the damage caused by the American
strikes, saying they had set back Tehran's nuclear programme by just a few
months.

Trade Nation's Morrison said if those assessments are correct it would pose
serious concerns for investors as "it opens up a myriad of possibilities"
about how the situation could develop.

Trump's comments were made in The Hague, where he struck a conciliatory tone
toward NATO allies, framing the deal on increased defence spending as a
"great victory for everyone".

Trump appeared keen to share the plaudits for the deal, which sees the 32
NATO countries commit to spending five percent of output on defence by 2035.

"Hot geopolitics is the big subject of the debate at the NATO summit and has
prompted nations to pledge to sharply increase their military spending
targets," Streeter said.

NATO allies on Wednesday declared Russia a "long-term threat" to their
collective security in a joint summit statement that also affirmed their
"enduring" support for Ukraine.

Streeter said the NATO spending deal was likely to support share prices of
defence groups, even if "much of the spending expectations have already been
baked into valuations".

- Key figures at around 1330 GMT -

Brent North Sea Crude: UP 0.6 percent at $66.58 per barrel

West Texas Intermediate: UP 0.9 percent at $64.92 per barrel

New York - Dow: FLAT at 43,084.54 points

New York - S&P 500: UP 0.2 percent at 6,104.63

New York - Nasdaq Composite: UP 0.5 percent at 20,018.69

London - FTSE 100: DOWN 0.4 percent at 8,728.67

Paris - CAC 40: DOWN 0.4 percent at 7,582.44

Frankfurt - DAX: DOWN 0.4 percent at 23,537.81

Tokyo - Nikkei 225: UP 0.4 percent at 38,942.07 (close)

Hong Kong - Hang Seng Index: UP 1.2 percent at 24,474.67 (close)

Shanghai - Composite: UP 1.0 percent at 3,455.97 (close)