Oil falls 2% after Trump agrees to hold off on Iranian strike

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The oil market’s daily movement is now hinging on the progress of the peace talks between Iranian and U.S. diplomatic authorities.

Oil fell 2% on Tuesday after U.S. President Donald Trump said that he would hold off on strikes on the request of GCC countries such as U.A.E, Saudi Arabia, and Qatar, who say they need more time to pursue a diplomatic solution with Iran, as per a Bloomberg report.

The 2% drop came from oil futures, specifically the Brent crude oil futures and the WTI crude oil futures. 

The following oil indexes reported a downslide in value, according to Oilprice.com.

• WTI crude: $103.6 (-0.79%)
• Brent crude: $110.3 (-1.59%)
• Murban crude: $106.6 (-1.54%)

Multiple strikes aimed at U.A.E and Saudi Arabian facilities have encouraged investors to price for additional risk when it comes to U.S. equities and bonds. As the conflict progresses, the market is maintaining its more risk-averse stance for investments globally.

The S&P500 suffered its second consecutive day of losses along with the NASDAQ and the Russell 2000, but the gap has narrowed as compared to Monday. Bloomberg data showed the following movements for U.S. stock indexes: 

• S&P500: -0.07%
• NASDAQ: -0.43%
• Dow Jones (DJIA): +0.33%
• Russell 2000: -0.59%

It is also the second day of loss in value of tech stocks. NVIDIA is due to report earnings later this week. The data center segment is the largest key driver of revenue for their business. 

Global stocks on the whole are posting a mixed outlook, with downturns in the American stock market, but rebounds and gains were seen in Asian and European stock indexes, with rebounds from previous day’s losses seen in the NIFTY50, FTSE100, ASX200, and Hang Seng Index, according to CNBC data.

European stock indexes

• STOXX600: +0.62%
• DAX: +1.04%
• FTSE: +0.53%
• CAC: +0.68%

Asian stock indexes

• ASX200: +1.17%
• Nifty50: +0.28%
• HSI: +0.48%
• NIKKEI: -0.44%

The sole exception to the rally is the NIKKEI, which was down by 0.44%, extending losses into the second day. Japan faces a backdrop of inflation, rising global bond yields, and a recently revised GDP forecast.

Typical tech stock gainers that were benefitting from the AI boom and the broader trend of strong earnings reports earlier this week are now seeking more positive signals from the market for growth. These could be company-specific, like a positive update or related to positive macro-economic developments.

The current oil crunch is not just putting pressure on stock indexes which are now pricing for added risk but also import bills according to Oilprice.com. Asian peers, mainly India, are now looking for a more reliable source of crude amid dampened supply.

Australia is now considered an alternative source of crude oil and natural gas (Source: Bloomberg). Its strategic location away from the Strait of Hormuz gives it a supply advantage as it can provide a steady supply of oil to Asian peers through the South China Sea. The main roadblock to this proposition is Australia’s status as a minor oil producer. An adequate supply requires increased production. 

U.S. currency pairs were the strongest performers on Tuesday, appreciating against the Hong Kong Dollar, Canadian dollar, the Japanese Yen, and the Swiss Franc.

• USD/HKD: +0.03%
• USD/CAD: +0.09%
• USD/JPY: +0.16%
• USD/CHF: +0.17%

Final outlook

Global markets are now posting a mixed outlook, with regional stock indexes behaving differently but certain trends such as elevated oil prices, rising fuel costs, and a shifting risk sentiment in response to rising inflation are now forming a repeated pattern.

Research references:

• https://www.bloomberg.com/news/articles/2026-05-19/trump-says-he-held-off-bombing-iran-after-gulf-states-appealed?srnd=homepage-middle-east
• India Hikes Fuel Prices for the Second Time in a Week | OilPrice.com
• Trump Says Holding Off on New Iran Strikes After Gulf Appeal - Bloomberg
• TIKR data
• CNBC data

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