The Japan Times - Oil falls as US waives Iranian crude sanctions

The British pound and the London stock market firmed, and the UK's benchmark 10-year bond dipped, after Britain's embattled Prime Minister Keir Starmer announced his widely expected resignation.

Internationally, the main focus remained firmly on the Middle East and the prospects for a reopening of the Strait of Hormuz to tanker and cargo traffic.

Iran's senior envoys left talks in Switzerland on Monday after a marathon negotiating session with the United States, state media reported.

US President JD Vance declared that a "very good foundation" had been laid for negotiations towards a final deal with Iran, with mediators also claiming progress.

The US Treasury said later Monday it was temporarily lifting sanctions on Iran to allow the Islamic Republic to produce, sell and deliver crude oil and related products through August 21.

Meanwhile maritime traffic in the Strait of Hormuz continued to flow at a faster pace than before the agreement between Iran and the United States on talks to end their war, according to tracking firms, despite Tehran's weekend announcement of a renewed closure.

"The latest developments out of the Middle East have turned more constructive," said Deutsche Bank analyst Jim Reid, adding that a pickup in oil flows through the Strait of Hormuz was "helping to calm markets".

Last week, Tehran and Washington signed a memorandum of understanding laying the groundwork for the negotiations, after a 40-day war that was followed by weeks of an inconclusive and oft-breached ceasefire.

The negotiators aim to tackle some of the most intractable issues that have dogged US-Iranian relations for decades, including Tehran's nuclear programme and enriched uranium.

"This is looking to be a day-by-day headline ordeal, and true to form, the equity market will take a foot when given an inch on what sounds like progress toward a final deal that will hopefully turn a ceasefire into a lasting peace," said Briefing.com analyst Patrick O'Hare.

Wall Street's main stock indices traded mostly lower after a three-day holiday weekend.

In Europe, both London and Frankfurt ended the day higher, but Paris fell.

- UK shakeup -

In Britain, Starmer's departure could mean a change of finance minister and increased public spending, a prospect that has alarmed investors concerned about the country's debt levels.

Veteran Labour politician Andy Burnham, who secured a return to parliament just last week, appeared poised to succeed Starmer after a would-be rival, Wes Streeting, offered him his support.

Starmer will remain prime minister until late this year when Labour elects a new leader, who would become the country's seventh prime minister in a decade.

"The pound has taken the news in stride, although Burnham's preference for fiscal expansion, higher taxes and greater gilt issuance is a concern," said Enrique Diaz-Alvarez, chief economist at the financial services firm Ebury.

"The critical question is who becomes chancellor" of the exchequer, he said.

Rachel Reeves has been finance minister since Labour returned to power nearly two years ago, having overseen some controversial choices regarding state spending and taxes that contributed to Starmer's demise.

"Continuity with Reeves would be the market's preferred outcome, but any indication that a new chancellor intends to loosen or abandon the existing fiscal rules could trigger fresh selling in UK assets," Diaz-Alvarez said.

- Key figures around 1530 GMT -

Brent North Sea Crude: DOWN 4.1 percent at $77.27 a barrel

West Texas Intermediate: DOWN 3.4 percent at $73.30 a barrel

New York - Dow: UP 0.3 percent at 51,716.83 points

New York - S&P 500: DOWN 0.4 percent at 7,473.05

New York - Nasdaq Composite: DOWN 1.1 percent at 26,225.71

London - FTSE 100: UP 0.7 percent at 10,437.85 (close)

Paris - CAC 40: DOWN 0.3 percent at 8,400.11 (close)

Frankfurt - DAX: UP 0.6 percent at 25,139.69 (close)

Tokyo - Nikkei 225: UP 1.6 percent at 72,353.96 (close)

Hong Kong - Hang Seng Index: DOWN 0.7 percent at 23,768.52 (close)

Shanghai - Composite: UP 1.8 percent at 4,163.10 (close)

Seoul - Kospi: UP 0.7 percent at 9,114.55 (close)

Pound/dollar: UP at $1.3258 from $1.3218

Euro/dollar: DOWN at $1.1444 from $1.1464 on Friday

Dollar/yen: UP at 161.40 yen from 161.27 yen

Euro/pound: DOWN at 86.32 pence from 86.73 pence

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H.Takahashi--JT