Oil Jumps, Stocks Pull Back as Mideast Ceasefire Hangs in the Balance

Oil prices jumped and global equities eased on Monday as markets grew increasingly concerned that the ceasefire between the United States and Iran might not hold, while tensions over the Strait of Hormuz escalated.

Brent crude futures rose approximately 6% to $95.85 a barrel. MSCI's world share index was last down around 0.3%, with Europe's STOXX 600 falling 1.1%, while S&P 500 futures were 0.65% lower. Asian equity markets, however, shrugged off risks and advanced.

Concerns mounted on Monday that the ceasefire might not hold after the US said it had seized an Iranian cargo ship that attempted to run its blockade, with Iran vowing to retaliate. The US has maintained a blockade of Iranian ports, while Iran has lifted and then reimposed its own blockade on marine traffic passing through the Strait of Hormuz.

Kpler data showed that more than 20 vessels carrying oil products, metals, gas, and fertiliser passed through the strait on Saturday—the busiest day for the chokepoint since March 1.

"Markets try to cling on to every bit of news that may point to one outcome or another, hence these large swings. But it is still a very uncertain and volatile situation," said Sandra Horsfield, economist at Investec. She noted that while markets have pulled back, moves made on Friday—when Iran said it would open the Strait of Hormuz—had not been fully retraced, suggesting that at least some improved sentiment still prevails.

Peace Talks in Question

The outlook for further negotiations between the US and Iran appeared uncertain. Iran rejected new peace talks with the US, its state news agency reported on Sunday, hours after President Donald Trump said he was sending envoys for talks in Pakistan and would launch new strikes on Iran unless it accepts his terms.

"Whether this impasse proves to be merely a detour on the path to a resolution remains to be seen, but more volatility would seem the most likely outcome," said Derren Nathan, head of equity research at Hargreaves Lansdown.

Broader Markets

Bonds, which rallied on Friday, retreated. The yield on benchmark 10-year Treasuries rose 2.6 basis points to 4.2697%, while the yield on German 10-year government bonds was last 3.6 basis points higher at 3.0015%. The dollar broadly steadied, trading at $1.1761 per euro.

Wall Street indexes touched record highs on Friday, supported by expectations of robust first-quarter earnings, the bulk of which are due this week. British inflation data, US retail sales, and European Purchasing Managers' Index figures are also due through the week, though much of markets' focus will remain on Gulf shipping.

"The critical barometer of geopolitical risk has been distilled into one data point: The number of ships transiting the Strait of Hormuz," said Bob Savage, head of markets macro strategy at BNY. "Peace talks matter, but the immediate focus is on oil and other supply shortages driving inflation."

Market Sentiment: 

The sentiment is highly volatile and news-driven, with markets swinging on each development in the US-Iran ceasefire negotiations. The 6% jump in oil prices reflects genuine concern that the blockade and counter-blockade of the Strait of Hormuz could persist or escalate, threatening physical supply. However, the fact that markets have not fully retraced Friday's relief rally suggests residual optimism that a resolution remains possible. The busiest shipping day since March 1 provides a counter-narrative—actual traffic is flowing, even if the geopolitical rhetoric remains heated. For equities, the modest pullback (0.3-1.1%) is restrained relative to oil's spike, indicating that investors are not yet pricing a worst-case scenario. The focus on first-quarter earnings and economic data this week adds another layer: strong results could support stocks even if geopolitical tensions persist. The key barometer remains Hormuz shipping volumes—as BNY's Savage notes—more than diplomatic statements. The market is in a wait-and-see mode, with large swings likely to continue as each new headline lands. For now, the base case appears to be that a ceasefire eventually holds, but the path is non-linear and fraught with volatility.

Disclaimer:
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