Oil prices tick up amid doubt on Iran war ceasefire; Chinese factory gate costs increase for first time in four years

Asian stock markets rose overnight, with Japan’s Nikkei index and China’s CSI300 index both up by about 1.8%. The South Korean Kospi rose 1.5%, and Hong Kong’s Hang Seng nudged up 0.5%.

Mohit Kumar, of the broker Jefferies, notes that markets “want to rally”.

We do acknowledge that the ceasefire is fragile and risks of a short term escalation to gain an upper hand in negotiations remain. But the view that is that any dips would be a buying opportunity. We are still keeping the risk profile low given the potential for near term volatility.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

There has been another small rise in the oil price this morning, as doubt lingers around the US-Iran ceasefire deal.

Brent crude, the international benchmark for oil, has ticked up 0.6% to $96.45 a barrel, having plunged by more than 10% earlier in the week to below $100 a barrel after news of the agreement first emerged.

But the fragility of the deal is testing investor nerves. US president Donald Trump has warned Iran that charging fees for passage through the strait of Hormuz, the key shipping channel through which about a fifth of the world’s oil and gas supply normally passes, is “not the agreement we have”.

He wrote on his social media platform, Truth Social:

There are reports that Iran is charging fees to tankers going through the Hormuz Strait — They better not be and, if they are, they better stop now!

A few hours later he wrote:

Iran is doing a very poor job, dishonorable some would say, of allowing Oil to go through the Strait of Hormuz. That is not the agreement we have!

However, the president has also told reporters that he was “very optimistic” a peace deal was within reach and that he had asked Israel’s prime minister Benjamin Netanyahu to pull back on strikes in Lebanon.

He told NBC News:

I spoke with Bibi and he’s going to low-key it. I just think we have to be sort of a little more low-key.

Meanwhile, the impact of the war in Iran is spreading across the global supply chain: China has recorded its first year-on-year increase in factory gate prices since 2022.

The producer prise index rose 0.5% in March year-on-year, compared with a drop of 0.9% in February. The last time Chinese producer inflation was positive was in September 2022.

Kelvin Lam, a senior economist at Pantheon Macroeconomics, explains:

Industries that are more tied to energy as an input, or with intermediate inputs that have a high energy content, are witnessing higher factory gate prices despite soft domestic demand and the ongoing slump in the property sector.

Earlier industrial profit data point in the same direction, with energy-intensive and metal industries seeing moderate improvements in margins, suggesting modest pass-through to end users. According to the NBS, oil and gas extraction PPI rose 15.8% m/m in March, while petroleum and coal processing PPI increased by 5.8%. Chemical products PPI rose 3.6%, while non-ferrous metal processing eased to 1.0% from 3.6% in February.

Consumer prices however rose 1% year-on-year in March, which marked a deceleration against an annual rate of 1.3% in February.

The agenda

1.30pm BST: US CPI inflation rate and real earnings data for March

3pm BST: US factory orders

3pm BST: University of Michigan’s US consumer sentiment index

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