Investor sentiment turns cautious as growth concerns, tariff risks and shifting rate expectations outweigh earlier hopes for stronger demand.
Oil prices tumbled and stocks rose on Wednesday after reports that Washington sent a peace plan to Iran, while Tehran announced it will let 'non-hostile' oil vessels through the crucial Strait of Hormuz.
The international benchmark Brent crude dipped slightly to around $69.57 per barrel, while US West Texas Intermediate hovered near $66.29, as traders reassessed demand outlooks.Comments from Donald Trump earlier this week had initially buoyed sentiment, with the US president dismissing recession fears and describing the economy as being in a “period of transition” that would ultimately drive growth.But those reassurances were quickly overshadowed by renewed concerns that US tariffs on key trading partners could slow global economic activity — and in turn weaken oil demand.Fed outlook shiftsMarket expectations around the Federal Reserve also shifted, adding to downward pressure.Earlier hopes for a rate cut had supported prices, but analysts now say the Federal Reserve may hold or even tighten policy to counter inflation, which would strengthen the dollar and make oil less attractive to investors.Supply fears easeAt the same time, supply-side concerns have cooled. Fears that Ukrainian drone attacks could disrupt Russian oil output have eased after reassurances from officials, reducing the risk premium that had supported prices.The combination of softer demand expectations, policy uncertainty and stabilising supply has left oil markets searching for direction — with caution now replacing earlier optimism.
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