With the US-Iran ceasefire deadline approaching, global markets are on edge. As tensions escalate and potential talks hang in the balance, how will this impact oil prices and economic stability?
Image: Facebook/White House
With the ceasefire deadline between the United States (US) and Iran set to come to an end, global markets have been left on edge with the next steps in the conflict remaining unclear.
Tensions escalated this week when reports suggested that Iran might decline a second round of talks with the United States.
This uncertainty drove the S&P 500 down by 0.2%, reflecting a cautious sentiment among traders. However, the mood brightened slightly following emerging reports indicating Iran's potential willingness to participate in discussions.
"The market's response has been somewhat bipolar, fluctuating between apprehension and optimism. This instability contributes to an atmosphere of unpredictability as global investors try to gauge the future landscape. Adding to the intrigue, this week also saw Kevin Warsh, President Donald Trump’s nominee for the Federal Reserve Chair, undergoing Senate hearings, keeping economic policy experts on alert," Bianca Botes, Managing Director at Citadel Global said.
Gold prices took a hit, dropping nearly 0.5% to rest at $4,797 per ounce. Contrary to these trends, the US dollar showed marginal gains, providing an interesting juxtaposition in a shifting economic landscape.
In the currency markets, the South African rand remained relatively stable, closing at R16.38 to the US dollar, R19.29 to the euro, and R22.14 to the British pound.
"This stability in the rand hints at a degree of resilience amid the global economic turbulence," Botes said.
According to Head of Client Group, Schroders South Africa, Philip Robotham, the next couple of months will show very large global oil inventory draws.
Robotham said, "In some regions, inventories will still reach critical levels. Tankers will start moving, but oil fields and oil refineries are still shut."
The oil price on Tuesday traded close to $95 a barrel, in part based on a belief that the conflict will end soon.
Robotham added, "The global gas market has an even greater structural problem with around 17% of Qatar’s Liquid Natural Gas (LNG) output damaged, which will take 3-4 years to bring back online. ‘Normal’ demand estimates of around 108mb/day in 2027, meant that the oil market was in a deficit. The restocking and production outages mean that the market will now be in a bigger deficit."
Robotham said, "OPEC now has limited spare capacity and non-OPEC supply growth is limited from here. Companies need to start investing and this is why forward oil prices have increased over the last few months."
Robotham said that the long-term structural deficit in both oil, gas and power markets remains.
"In order to fix both of these markets, we need increased investment rates and that requires higher oil and gas prices in the long term," he added.
Foord Asset Management Portfolio manager Brian Arcese told Business Report that higher oil prices do more than unsettle inflation forecasts, they complicate central bank policy, squeeze household spending and leave investors facing the awkward mix of weaker growth and sticky prices.
Arcese said, "Geopolitical risk returned with a bang in 2026. The war on Iran has done what Middle Eastern wars so often do: it has pushed energy back to the centre of the investment picture. The region remains critical to global oil supply, so when shipping routes are disrupted and supply is less secure, crude prices rise and volatility spikes. This matters well beyond commodity markets. Dearer energy costs are related into transport, production and, before long, the general cost of living."
"The oil shock has come at an inconvenient moment for policymakers. Global inflation had been easing from earlier peaks, but it had not disappeared. Central bankers were hoping for a gentler path forward from here; higher oil prices now make that harder, adding fresh price pressure just as growth is starting to lose momentum. Fears of stagnant growth, job losses and rising prices — are perhaps overblown for now,"Arcese added.
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