Renewed hopes for US-Iran diplomacy helped lift stocks and push oil prices lower on Monday, as Iranian President Masoud Pezeshkian prepared to attend the UN General Assembly in New York.
The visit opens a possible window for talks with Washington, although a diplomatic breakthrough remains uncertain. President Donald Trump has continued warning about the consequences of failing to reach a deal, according to CNBC.
Oil Falls as Investors Watch for Talks
Brent crude fell more than 3% to around $100.20 a barrel, while US benchmark West Texas Intermediate dropped below $97 during Monday’s trading.
The Financial Times reported that Trump had signalled openness to meeting Pezeshkian, while US ambassador to the UN Mike Waltz raised the possibility of renewed negotiations.
European stocks also recovered, with the Stoxx Europe 600 rising 1.1%. Government bond yields declined as cheaper oil eased some of the pressure from energy-driven inflation.
Wall Street Gets Some Relief
US stocks gained too, helped by both lower oil prices and renewed enthusiasm for AI companies. The Nasdaq rose about 1.5%, while the 10-year US Treasury yield slipped below 5%, according to Reuters.
The economic connection is straightforward: sustained falls in oil prices can reduce transport and production costs, easing pressure on household budgets and businesses. But one day’s decline does not resolve the supply risks surrounding the Strait of Hormuz.
Related: Oil Market Faces New Reality as Strait of Hormuz Disruption Drags On
Markets are welcoming the possibility of progress. A lasting recovery will depend on whether diplomacy delivers safer shipping and more reliable energy supplies, rather than another brief pause in tensions.
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