Oil prices plunge 15% to below $100, stocks surge and dollar slumps after Trump announces US-Iran ceasefire – business live

Gas prices slide 20%, government bond yields fall sharply as rate hike expectations recede

Despite the sharp drop in crude oil prices today, Mohit Kumar, chief European economist at Jefferies, does not expect oil prices to go back to pre-war levels anytime soon, and warned it could take months for energy supply to return to normal levels.

Here are his thoughts.

We would view the Iran 10 point proposal positively and do think that it could become the basis for further negotiations. The important background is that Trump really wants a deal and wants to get out of the war and hence would be open for negotiations.

The two contentious elements from the Iran proposal are 1) no mention of nuclear deal 2) the proposal to charge a fee which would be unacceptable to the US or its allies.

Potential alternative routes for the strait of Hormuz would be in focus. For Iran, sadly we fear that apart from reconstruction, it would continue its efforts to acquire a nuclear weapon as a credible deterrent.

Hence we do not see oil going back to pre-war levels anytime soon. We would also need to price a geopolitical risk premium across asset classes which would produce winners and losers.