Oil rebounds as markets track Iran-Israel ceasefire - Energy
Oil prices recovered as stock markets diverged Wednesday while traders assessed whether the Israel-Iran ceasefire would endure.
Focus was also on a NATO summit that signed off on a sharp increase to military spending by the United States and its allies.
The dollar recovered mildly, having slumped Tuesday after Federal Reserve boss Jerome Powell did not rule out the prospect of cuts to US interest rates, as President Donald Trump's tariff war risks slowing the economy.
"Optimism about the fragile ceasefire holding between Iran and Israel has bubbled through markets... but more doubts are now creeping in about the truce holding," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Trade Nation analyst David Morrison said that "Investors are mindful that the current ceasefire may break down, although that seems like a small risk for now."
Asian stock markets closed higher following rallies on Wall Street and in Europe on Tuesday on news of the ceasefire declared by Trump.
But European stocks dipped, and Wall Street opened mixed.
The world's main oil contract, Brent North Sea crude, rose 0.6 percent Wednesday after tumbling almost seven percent Tuesday.
Brent and the main US crude contract, WTI, had soared Monday in the first reaction to the US bombing of Iran.
Trump said Wednesday that the US strikes resulted in the "total obliteration" of Iran's nuclear capabilities, setting the country's atomic programme back by "decades".
"They're not going to be building bombs for a long time," he said, adding that the ceasefire between Israel and Iran was going "very well".
But leaked US intelligence cast doubt on the damage caused by the American strikes, saying they had set back Tehran's nuclear programme by just a few months.
Trade Nation's Morrison said if those assessments are correct it would pose serious concerns for investors as "it opens up a myriad of possibilities" about how the situation could develop.
Trump's comments were made in The Hague, where he struck a conciliatory tone toward NATO allies, framing the deal on increased defence spending as a "great victory for everyone".
Trump appeared keen to share the plaudits for the deal, which sees the 32 NATO countries commit to spending five percent of output on defence by 2035.
"Hot geopolitics is the big subject of the debate at the NATO summit and has prompted nations to pledge to sharply increase their military spending targets," Streeter said.
NATO allies on Wednesday declared Russia a "long-term threat" to their collective security in a joint summit statement that also affirmed their "enduring" support for Ukraine.
Streeter said the NATO spending deal was likely to support share prices of defence groups, even if "much of the spending expectations have already been baked into valuations".
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