Oil prices return to 100 dollars a barrel as hopes of Iran peace talks wane

Oil prices have risen to 100 dollars a barrel as waning optimism over a US-Iran peace deal weighs on global energy markets.

It was nonetheless a mixed morning for the financial markets with UK stocks climbing higher and government borrowing costs falling to the lowest in a month.

The price of Brent crude oil was rising by about 3.5% on Tuesday morning after falling back slightly over the Bank holiday weekend.

Investors have been pinning their hopes on talks between the US and Iran that may be edging closer to a peace deal and lead to the reopening of the Strait of Hormuz.

The US military said on Monday that it carried out “self-defence” strikes in southern Iran, but President Donald Trump said in a social media post that negotiations were “proceeding nicely”.

Stock markets were on stronger footing however, with the UK’s FTSE 100 up about 0.6% on Monday morning, to 10,526.

This was in contrast to European peers, with France’s Cac 40 falling by about 1%, and Germany’s Dax index down 0.7%.

Meanwhile, the UK’s long-term borrowing costs were continuing to ease, having hit their highest level for 28 years earlier in the month.

The yield on 30-year UK government bonds, also known as gilts, was down by about five basis points to 5.53%.

10-year gilt yields were also down by five basis points to 4.86%.

Rich McDonald, market analyst for IG, said it was a “messy” morning for global markets, adding: “Oil initially fell around 7% as traders hoped for the breakthrough promised by the American president, but confidence has since faded, with crude now rallying around 3% from the overnight lows.

“At best, the ceasefire appears to have been extended, talks are still alive, and that lowers the immediate risk of a fresh Hormuz shock – but we don’t yet seem to have made progress on the hard issues,” he said.

“Enriched uranium, sanctions, regional security and the full normalisation of Strait of Hormuz flows all remain unresolved, with markets now awaiting progress reports from ongoing negotiations.”