The FTSE 100 opened lower yesterday, weighed down by a global sell-off that impacted markets across Asia and the US overnight. The index dipped 0.5% to 7,483.25 points, as investors remained cautious despite positive indications from Washington on progress in Iran nuclear deal talks.
US Vice President JD Vance's statement that negotiations had established a "very good foundation for a successful final deal" failed to translate into robust market sentiment in London. In fact, the FTSE 100 underperformed its peers, declining 0.45% against the broader European equity benchmark.
A key development in the talks was the US issuance of a general licence permitting the export of Iranian oil. This move fulfils a critical component of the memorandum of understanding reportedly signed by the US and Iran last week. In response to this news, international oil prices – particularly Brent crude – eased, dipping below $78 per barrel as expectations of quicker supply recovery took hold.
Furthermore, traffic through the crucial Strait of Hormuz has reportedly increased, while producers including Kuwait and the United Arab Emirates are understood to be utilising alternative export routes for their energy supplies. Meanwhile, Iran is believed to have shipped over 30 million barrels of oil in the past week, contributing to downward pressure on oil prices.
Despite these advancements, a significant point of contention remains Iran's nuclear programme. While Vice President Vance claimed that Tehran had agreed to accept nuclear inspectors, this assertion was subsequently challenged by Iranian officials, highlighting ongoing complexities and potential obstacles to a comprehensive agreement.