Investing.com – European stocks slipped on Thursday, while oil prices climbed back above $100 a barrel, as investors appeared to temper hopes for progress in efforts to end the Iran war.
The pan-European Stoxx 600 fell 1.1%, the in Germany dipped 1.6%, the in France declined 1%, and the in the U.K. dropped 1.3%.
Tehran is reviewing a 15-point peace proposal from the United States, according to media reports, although the two sides appear to remain far from reaching an immediate accord to end an almost month-old conflict.
U.S. President Donald Trump has told aides that he would like to see a swift resolution to the fighting, signaling that the White House is looking for an off-ramp from its joint assault on Iran with Israel, the Wall Street Journal reported.
Trump has claimed that Iran is now desperate to make a deal to halt hostilities, yet this account conflicts with that of the Iranian foreign minister, who has said Tehran has no intention of holding negotiations aimed at slowing down the war.
Oil prices have remained elevated, reflecting ongoing investors fears over a prolonged closure to the Strait of Hormuz, a crucial conduit through which roughly a fifth of the world’s oil and natural gas traverses. The threat of Iranian attacks has effectively shuttered the strait for weeks, pushing up crude prices and reigniting worries over a spike in inflation in countries around the globe.
Some central banks, as a result, have begun to suggest that interest rate hikes could be back on the table. On Wednesday, European Central Bank President Christine Lagarde said an uptick in borrowing costs could be in order even in the event of “not-too-persistent” inflation caused by an Iran-related energy shock.
Brent crude, the global benchmark, was last higher by 5.1% at $102.24 a barrel. Brent recently declined from roughly $110 a barrel last week thanks to hopes for an impending conclusion to the fighting, yet remains well above levels before the outbreak of the conflict in late February.
Analysts have also flagged that, even if the war were to end shortly, investors are likely demand a risk premium for oil in the near-term, meaning crude may not immediately sink back down to pre-conflict levels.