The indefinite extension of the ceasefire in the Iran war strengthens expectations that prolonged Middle East conflicts are in a de-escalation phase, even though the second round of peace talks is on hold, while the peak for global oil prices has passed, say analysts.
Suwat Sinsadok, managing director of Globlex Securities, said he hoped fighting in the Middle East could end in 1-2 months after US President Donald Trump said he would indefinitely extend the Iran ceasefire, although the Strait of Hormuz is still closed.
Trump’s announcement appeared to be unilateral, and it was not immediately clear whether Iran or US ally Israel would agree to extend the ceasefire, which began two weeks ago.
US Vice-President JD Vance cancelled his trip to Pakistan for a second round of peace negotiations, with US officials citing Tehran’s failure to respond to American positions.
Oil prices fluctuated slightly, with Brent crude dipping 0.3% to US$98.20 a barrel while West Texas Intermediate (WTI) fell 0.5% to $89.21 following the announcement.
“The ceasefire extension means no further attacks on Iran’s oil infrastructure,” said Natapon Khamthakrue, assistant managing director of securities analysis at Yuanta Securities (Thailand).
Mr Natapon expects Iran and the US could resume talks on a peace deal by the end of this week. In Yuanta’s view, Brent is projected to peak at around $100 per barrel for now, while WTI crude might trade at $90.
Mr Suwat ruled out the possibility of global oil prices returning to a record high near $150 a barrel thanks to increasing supplies from Middle Eastern and Russian producers.
The Middle East contributes around 30% of global oil supply, down from around half in the past, while Russia and Kazakhstan have pumped more oil.
“This shift lowers the risk of supply shortage. The latest price spike was mainly caused by disruption of oil shipments,” he said.
With no signs of a resumption in talks yet, Asian stocks rose on Wednesday, tracking overnight gains on Wall Street. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5% after hitting a seven-week high on Tuesday, while Japan’s Nikkei surged to a record high.
With global sentiment supporting risk assets, the Stock Exchange of Thailand was lifted by Moody’s upgrade of Thailand’s credit rating outlook to stable, supported by improved political stability and recovering investment.
Krungsri Securities continues to assess the war as having passed its peak, but said further developments in negotiations must be monitored. Moody’s outlook upgrade reiterates that Thailand’s fiscal position remains “stable and resilient”, alleviating prior concerns of a potential downgrade amid speculation of rising public debt or debt ceiling adjustments, noted the brokerage.