Oil prices have dropped following the United States and Iran’s signing of an interim peace agreement, resuming a slide interrupted by US President Donald Trump’s warning that he could restart his military campaign.

Brent crude fell 2.3 percent on Thursday in Asia, returning the international benchmark to near to where it was 24 hours previously

Brent futures for delivery in August stood at $77.73 as of 05:30 GMT, only about 7 percent higher than before the US and Israel launched their war on Iran on February 28.

After several days of declines, Brent briefly spiked above $81 a barrel on Wednesday after Trump warned that the US could “go right back to dropping bombs” on Iran if it doesn’t “behave”.

Shrugging off losses on Wall Street overnight, Asian stock markets rallied on renewed optimism for an end to nearly four months of disruption to global energy supply chains.

Japan’s benchmark Nikkei 225 and South Korea’s Kospi both hit all-time highs, gaining more than 2 percent and 1.7 percent, respectively.

Taiwan’s Taiex rose as much as 1.3 percent.

Hong Kong’s Hang Seng Index bucked the trend, dropping 1.7 percent.

US stock futures, which are traded outside of regular market hours and often foreshadow the next day’s performance, climbed, with those tied to the benchmark S&P 500 and the tech-heavy Nasdaq Composite climbing about 0.8 percent and 1.3 percent, respectively.

“Putting aside the contents of the MoU, markets are likely to be welcoming the fact that both the US and Iran signed it sooner than initially expected,” Norihiro Yamaguchi, lead economist for Japan at Oxford Economics, told Al Jazeera.

“The timing is also supportive, as the major central bank policy meetings have now passed, reducing a key source of uncertainty,” Yamaguchi said.

“For Asian markets, the renewed strength in US semiconductor stocks should provide an additional boost, given the region’s heavy exposure to tech shares.”

Pakistani Prime Minister Shehbaz Sharif, who mediated the negotiations between Washington and Tehran, said on Wednesday that the US-Iran memorandum of understanding (MoU) had entered into force with “immediate effect”.

Sharif said Iran would “instantly reopen” the Strait of Hormuz and the US would “immediately” lift its naval blockade of Iranian ports, though it was not immediately clear if the announcement had any effect on boosting maritime traffic in the critical waterway.

Shipping in the strait has been reduced to a fraction of peacetime levels due to the threat of Iranian missiles, drones and mines, as well as the US blockade.

The blockage has resulted in an estimated daily shortfall of 14 million barrels in the global oil market, according to the International Energy Agency (IEA).

Fabien Yip, a market analyst at IG in Sydney, said that while markets have responded to the MoU with optimism, the relief is “largely priced in” as practical issues such as the backlog of vessels in the Gulf and mine clearing operations must still be resolved.

“There is a notable divergence between sentiment and physical supply – production ramp-up and logistics normalisation will take time,” Yip told Al Jazeera.

While more than 500 vessels are estimated to be waiting to exit the Gulf through the strait, shipping companies have expressed concern about the lack of clarity on how to ensure the safety of their vessels and crews in the channel.

In a statement earlier this week, the Baltic and International Maritime Council (BIMCO), one of the world’s largest associations for shipowners, said the US and Iran had yet to provide information about “key aspects such as timings and safe routes”.

“Due to lack of details and a history of overly optimistic reassurances, we believe the security situation for the shipping industry remains volatile, and we still consider it very risky for ships to commence transits at this point,” Jakob Larsen, chief safety and security officer at BIMCO, said in a statement on Monday, responding to the initial announcement of the MoU.

“We advise shipowners to continue doing thorough risk assessments and appeal to all parties to put the safety of seafarers first.”

[Aljazeera]

Leaders of the G7 have pledged at a summit in France to strengthen Ukraine’s air defences and increase pressure on Moscow’s war economy, including by tightening sanctions on the Russian oil and gas sectors.

“We, the Leaders of the G7, stand united in our unwavering support for Ukraine in defending its freedom, sovereignty, and territorial integrity,” a statement released on Wednesday said.

“To support and accelerate this new momentum, we agree to increase the delivery of air defence capacities, additional systems and interceptors, and long-range capabilities.”

They added that the bloc, which includes Canada, France, Germany, Italy, Japan, the United Kingdom, the United States and the European Union, was “ready to consider extending to Ukraine the benefit of licenses to allow for an increase in Ukraine’s military production”.

President Volodymyr Zelenskyy, who joined the summit on Tuesday and also held bilateral talks with US President Donald Trump and Secretary of State Marco Rubio, has been pressing allies for more than a year to allow Ukraine to produce its own interceptors because of a shortage of US anti-ballistic systems and interceptors.

The G7 said that following a deal between the United States and Iran to reopen the Strait of Hormuz, sanctions could be strengthened on Russian oil and gas.

“We commit to increase the pressure on the Russian war economy,” the leaders’ statement said.

“In this context, we will strengthen our sanctions, including those on the oil and gas sectors. We consider this the right moment to proceed with additional measures, as President Trump has delivered a deal that we support in reopening the Strait of Hormuz.”

Taking his seat on the final day of G7 talks on Wednesday, Trump told the assembled leaders: “I’m the boss.”

Trump had been widely viewed as sceptical about pursuing a peace agreement between Russia and Ukraine, but told reporters on Tuesday that he would try to help.

“Look, Russia should make a deal,” he said. “I settled eight wars. This was the one I thought was going to be the easiest to settle.” Trump’s claim to have ended eight wars has been widely disputed.

“There has been a change in position on the part of the United States and President Trump,” Canadian Prime Minister Mark Carney told reporters. “There is a position that is harder toward Russia and more realistic, in our view, of the situation on the ground of the war.”

Zelenskyy said he had received important commitments from the G7. “More air defence missiles along with licenses to produce them, winter support package, and cranking up pressure on Russia. Importantly, the US is ready to provide backstop across these lines of effort,” he wrote on X.

“It is key that everything discussed be implemented. Russia must come to learn that its war will never be normalised. I thank everyone who’s helping.”

The G7 welcomed the deal between the US and Iran, with Britain and France offering help with resuming maritime traffic.

“We reaffirm that the right of transit passage without restrictions or tolls is the bedrock of international trade,” the statement said. “We agree that the multinational, independent, and defensive initiative led by France and the UK can play an important role to facilitate the resumption of maritime traffic in the Strait of Hormuz by protecting merchant vessels, reassuring commercial shipping operators, and supporting verification that all mines are removed.”

The leaders also called for “an immediate robust ceasefire” in Lebanon, to enable “the Lebanese leadership’s efforts to achieve the disarmament of Hezbollah and the monopoly of arms, and to protect Lebanon’s territorial integrity and sovereignty with the appropriate international security guarantees”.

Later on Wednesday, in a central theme of France’s G7 presidency, leaders will turn their attention to critical minerals and global economic imbalances.

France is pushing partners to agree on a statement on critical minerals that could include measures to help the West reduce its reliance on China and shield investors from countermeasures and dumping, diplomats said.

G7 leaders were also due to discuss artificial intelligence over lunch on Wednesday. OpenAI founder Sam Altman and Anthropic CEO Dario Amodei were expected to attend.

[Aljazeera]