Oil prices fell in volatile trading on Monday as investors await clarity regarding the status of talks between the United States and Iran, while concerns persist over supply losses resulting from shipping disruptions.

Brent crude futures fell 64 cents, or 0.6%, to $108.39 per barrel by 11:09 GMT. US West Texas Intermediate (WTI) crude futures declined 1.2%, or $1.33, to $110.21 per barrel.

Despite this decline, price movements in Asian trading on Monday appeared limited compared to the significant jump seen in the previous session on Thursday, when WTI rose 11% and Brent rose 8%, marking the largest absolute price increase since 2020.

Ceasefire proposal

The United States and Iran received a framework for a plan to end hostilities, but Tehran refused to reopen the Strait of Hormuz immediately after US President Donald Trump threatened to rain "hell" on the Iranian capital if an agreement is not reached by the end of Tuesday.

Iran also announced that it has drafted its positions and demands in response to the latest ceasefire proposals conveyed through mediators.

The Strait of Hormuz, through which oil and petroleum products from Iraq, Saudi Arabia, Qatar, Kuwait, and the UAE pass, remains largely closed due to Iranian attacks on ships since the outbreak of war on February 28.

However, shipping data showed that some vessels have crossed the strait since Thursday, including a tanker operated by an Omani company, a container ship owned by a French firm, and a gas carrier owned by a Japanese company, reflecting Iran's policy of allowing passage for vessels belonging to countries it considers friendlier.

Ole Hvalbye, an analyst at SEB research, said the market is trying to understand what to expect in the coming period, adding that the most significant news over the weekend was the passage of some ships through the strait.

He also noted that Europe continues to lose physical volumes of oil and products to Asia as market conditions tighten.

Search for alternative sources

Supply disruptions from the Middle East have prompted refiners to seek alternative sources of crude oil, particularly spot shipments in the United States and the UK's North Sea region.

Spot price premiums for US WTI have jumped to record levels as a result of competition between Asian and European refiners.

Refineries in India have also postponed routine maintenance of their units to meet domestic fuel demand.

Limited production increase from OPEC+

Meanwhile, the OPEC+ alliance, which includes some OPEC members and allies such as Russia, agreed to a modest production increase of 206,000 barrels per day for May.

However, this decision is expected to remain largely theoretical, as several major producers in the group are unable to increase production due to the war.

In the same context, Saudi Aramco set the official selling price (OSP) for Arab Light crude for May to Asia at a record premium of $19.50 per barrel above the Oman/Dubai average, an increase of $17 from the previous month.

Disruptions in Russian supplies

At the same time, Russian supplies have recently faced disruptions due to Ukrainian drone attacks on export ports in the Baltic Sea.

Media reports indicated that the export terminal in Ust-Luga resumed loading operations on Saturday after several days of disruption.

Oil exports from the Black Sea port of Tuapse are expected to rise to 794,000 metric tons in April, a daily increase of 8.7% compared to the March plan of 755,000 tons, according to Reuters calculations and trader sources.

The dollar stabilized on Monday while the Japanese yen approached the critical level of ¥160 per dollar, as anxious investors assessed escalating war developments with Iran and focused on the final deadline set by US President Donald Trump to reopen the Strait of Hormuz.

In a sharp social media post on Easter Sunday, Trump threatened to target power plants and bridges in Iran on Tuesday if the strategic maritime passage is not reopened, setting a precise deadline of 8:00 PM ET.

With most markets in Asia and Europe closed for holidays on Monday, liquidity is expected to be thin while investors focus on the potential for a ceasefire following media reports of a last-ditch effort by negotiators to achieve a breakthrough.

Charu Chanana, head of investment strategy at Saxo Bank in Singapore, said the new deadline announced by Trump carries negative implications for markets, not because investors believe war will break out immediately if the strait is not opened, but because every new ultimatum makes the disruption appear more long-term and impactful on the macroeconomy.

Currency movements

The euro stood at approximately $1.1523, while the British pound was recorded at around $1.3211.

The dollar index, which measures the performance of the US currency against a basket of six major currencies, eased slightly to 100.12.

The Australian dollar rose 0.3% to $0.69045, fluctuating near its two-month low recorded last week.

Conflicting messages from Washington

In contradictory messages that confused supporters, opponents, and financial markets alike, Trump said in a Fox News interview on Sunday that Iran is negotiating and that a deal could happen by Monday.

Axios also reported that the United States, Iran, and regional mediators are discussing terms for a potential 45-day ceasefire that could later lead to a permanent end to the war.

Global markets have been in turmoil since the outbreak of the war between the United States and Israel against Iran in late February, with Tehran effectively closing the Strait of Hormuz, a vital maritime corridor through which approximately one-fifth of the world's oil and liquefied natural gas supplies pass.

Prashant Newnaha, senior rates strategist at TD Securities, said that if the strait is fully reopened near Trump’s Tuesday deadline, oil prices would fall sharply and high-risk assets would rally strongly.

However, he added that if the United States escalates the conflict, global markets are expected to sharply reprice assets, explaining that investors are awaiting what appears to be a binary event.

Inflation and stagflation fears

The closure of the strait has pushed oil prices well above $100 per barrel, sparking fears of rising inflation and confusing interest rate expectations worldwide.

Concerns over the conflict's impact on economic growth have also rattled markets, with growing talk of stagflation risks.

In this context, traders no longer expect any move by the Federal Reserve before the second half of 2027, compared to expectations at the beginning of the year that indicated two rate cuts in 2026.

Data released last week showed that the US labor market remained relatively stable in March, but economists warned that a prolonged war in the Middle East could pose a downside risk to the economy.

Japanese yen under watch

The Japanese yen stabilized at ¥159.55 per dollar, near its 21-month low recorded last week, as traders monitor the possibility of Japanese authorities intervening to support the currency following strong warnings from officials in recent days.

Japanese Finance Minister Satsuki Katayama warned currency traders on Friday, confirming that the government is ready to act against speculative moves in the exchange markets as volatility has risen significantly.

However, many doubt the ability of any potential intervention to change the trend at a time when geopolitical turmoil in the Middle East is driving strong and sustained demand for the dollar as a safe haven.

The yen has declined by about 1.5% since the start of the war, remaining close to the ¥160 level against the dollar.

Recent data also showed that speculators increased their bearish bets on the yen, with short positions reaching approximately $5.7 billion, the highest level since July 2024 when Japan last intervened in the foreign exchange market.

Silver prices rose in European trading on Monday, moving upward toward a two-week high, supported by the slowdown in the US dollar against a basket of global currencies.

Officials in Iran received a proposal from Pakistan involving a short-term ceasefire to engage in intensive negotiations with the United States to reach a final agreement to end the war and military escalation in the Middle East.

Price Overview

Silver prices today: silver rose 0.8% to $73.57, up from the session opening level of $73.00, after hitting a low of $71.14.

At Thursday’s settlement, silver prices lost 2.75%, marking the second consecutive daily loss as corrections and profit-taking continued from a two-week high of $76.13 per ounce.

The white metal gained 4.6% last week, marking its second consecutive weekly gain.

US dollar

The dollar index fell 0.4% on Monday, on track for its first loss in three sessions, reflecting a decline in the US currency against a basket of major and minor currencies.

In addition to renewed profit-taking, the US dollar is declining amid growing hopes for an end to the Iran war, especially as Iran studies the Pakistani proposal to halt the military escalation.

Iran war updates

• Senior Iranian official: Tehran has received the Pakistani proposal and it is currently being reviewed.

• Iranian Foreign Ministry spokesperson: Tehran has prepared its diplomatic response to the United States and will announce it at the appropriate time.

• Trump vows that Iran will face "hell" by Tuesday if the deadline to open the Strait of Hormuz is not met.

• Axios: Iranian mediators are making last-ditch efforts to reach a 45-day ceasefire.

• Axios: Sources report that the chances of reaching a partial agreement within the next 48 hours are slim.

Gold prices rose in European trading on Monday, resuming gains that stalled in the previous session and approaching a two-week high, supported by the current decline in the US dollar against a basket of global currencies.

Officials in Iran received a proposal from Pakistan involving a short-term ceasefire to engage in intensive negotiations with the United States to reach a final agreement to end the war and military escalation in the Middle East.

Price Overview

Gold prices today: gold rose 0.65% to $4,704.84, up from the session opening level of $4,676.49, after hitting a low of $4,600.92.

At Thursday’s settlement, gold prices lost 1.7%, marking the first loss in five days due to corrections and profit-taking after earlier reaching a two-week high of $4,800.38 per ounce.

The precious metal gained 4.1% last week, marking its second consecutive weekly gain, driven by active investment demand taking advantage of lower price levels.

US dollar

The dollar index fell 0.4% on Monday, on track for its first loss in three sessions, reflecting a decline in the US currency against a basket of major and minor currencies.

As is widely known, a decline in the US dollar makes gold, which is priced in dollars, more attractive to buyers holding other currencies.

In addition to renewed profit-taking, the US dollar is declining amid growing hopes for an end to the Iran war, especially as Iran studies the Pakistani proposal to halt the military escalation.

Iran war updates

• Senior Iranian official: Tehran has received the Pakistani proposal and it is currently being reviewed.

• Iranian Foreign Ministry spokesperson: Tehran has prepared its diplomatic response to the United States and will announce it at the appropriate time.

• Trump vows that Iran will face "hell" by Tuesday if the deadline to open the Strait of Hormuz is not met.

• Axios: Iranian mediators are making last-ditch efforts to reach a 45-day ceasefire.

• Axios: Sources report that the chances of reaching a partial agreement within the next 48 hours are slim.

US interest rates

According to the CME FedWatch tool from CME Group, the probability that US interest rates will remain unchanged at the upcoming April meeting is currently priced at 99%, while the probability of a 25-basis-point rate hike stands at 1%.

Traders have almost entirely ruled out any possibility of a Federal Reserve rate cut this year. Before the outbreak of the Iran war, expectations pointed to two cuts this year.

To reassess these probabilities, investors are awaiting the release of several important US economic data points throughout this week regarding growth and inflation levels in the world's largest economy.

Gold outlook

Tim Waterer, chief market analyst at KCM Trade, said the latest strong non-farm payrolls data has reinforced hawkish central bank fears, while concerns over inflation driven by oil prices continue to overshadow gold's traditional safe-haven appeal.

SPDR fund

Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, remained unchanged on Thursday, leaving the total at 10,502.99 metric tons.