Oil and equities retreat amid rising concerns over Trump’s Iran move

dubai — As global oil prices retreated from 3-1/2 year highs, Gulf stock markets declined on Tuesday amid heightened investor concerns and uncertainty over an announcement was expected from US President Donald Trump later in the day on whether the United States will re-impose sanctions on Iran.

Trump said on Monday that a decision on whether to remain in the Iran nuclear deal or to impose sanctions would be announced at 1800GMT on Tuesday, four days earlier than expected.

Brent crude futures were down 2 per cent at $74.61 a barrel by 1546GMT, while US West Texas Intermediate (WTI) crude futures fell 2.5 per cent $68.95.

As concern on US move weighed on the markets reflecting cautiousness from investors across the board, in the UAE, the Dubai Financial Market index was down by 0.47 per cent to 2,948.84 points. Abu Dhabi’s index fell 1.33 per cent to 4,479.49 points.

In the regional markets, the Saudi index was down 1.29 per cent, dented by telecommunication shares, with Zain Saudi slumping almost 10 per cent after reporting late on Monday that it had swung to a loss in the first quarter, as it lost nearly two million subscribers over the period. Qatar’s market fell 1.26 per cent.

However, European stock markets were mostly lower after a day of gains in Asia. Japan’s Nikkei 225 stock index added 0.2 per cent to 22,508.69 and Hong Kong’s Hang Seng index climbed 1.4 per cent to 30,402.81. The Shanghai Composite index jumped 0.8 per cent to 3,161.50. South Korea’s Kospi gave up early gains to lose 0.5 per cent, ending at 2,449.81, while Australia’s S&P ASX 200 edged 0.1 per cent higher to 6,091.90. Shares were higher in Singapore and Taiwan but fell 1.9 per cent in Indonesia after the government reported economic growth slowed in January-March.

Oil market analysts said should Trump pull the United States out of a multi-nation agreement on Tehran’s nuclear programme, Iranian crude exports might be affected, but it would also fan the flames of geopolitical tensions in the Middle East, which is home to a third of the world’s daily oil supply.

They said markets are already getting tight as Opec and Russia cut production. The group has all but wiped out a stockpile surplus and intends to keep pushing inventories even lower. Iran is one of the world’s biggest oil exporters, shipping more than two million barrels a day to customers in Asia and Europe, so any loss of its supplies would increase the squeeze.

However, some analysts say the sanctions will only have a limited impact on the oil market because some importers like China and India will refuse to cut shipments.

They believe Trump can shrink Iranian shipments by 300,000 to 500,000 barrels a day, compared with the one million to 1.5 million barrels the Obama administration achieved.