Key Takeaways
- Global oil benchmarks Brent and WTI fell by $1.03 and $1.13 per barrel respectively following the announcement of a landmark US-Iran peace deal and the immediate reopening of the Strait of Hormuz.
- The People’s Bank of China (PBOC) weakened the yuan reference rate to 6.8130, a significant shift from the prior close of 6.7630, signaling a managed adjustment amid the shifting geopolitical landscape.
- South Korea has eliminated tariffs on LNG and LPG through a new quota scheme aimed at curbing domestic inflation and stabilizing energy costs for households and industry.
- Japan’s Ministry of Finance issued 2.8 trillion yen in Treasury discount bills as the nation navigates rising yields and a hawkish shift in central bank policy.
US-Iran Peace Deal Reopens Global Energy Artery
The global energy market experienced a significant relief rally as US President Donald Trump and Iranian officials signed a peace agreement to end months of hostilities. A central component of the deal is the immediate reopening of the Strait of Hormuz, a critical maritime chokepoint that previously carried roughly one-fifth of the world's petroleum liquids.
Market analysts noted that the removal of the geopolitical risk premium was the primary driver for the price drop. Brent crude and West Texas Intermediate (WTI) futures both retreated as the prospect of normalized Iranian oil exports and secure shipping lanes returned to the forefront. The deal, mediated by Pakistan, includes a 60-day ceasefire extension to allow for further negotiations regarding Iran's nuclear program and long-term sanctions relief.
PBOC Adjusts Yuan Midpoint Amid Regional Shifts
The People’s Bank of China (PBOC) set the daily yuan reference rate at 6.8130 on Thursday morning, representing a notable weakening from the previous session's close of 6.7630. This adjustment comes as the US dollar's status as a safe-haven asset faces pressure from the de-escalation in the Middle East.
In equity markets, Hong Kong-listed shares showed a mixed start. CK Hutchison (0001) shares were positioned to open up 1.1%, benefiting from improved global trade sentiment. Conversely, tech giant Tencent (0700) was set to open down 1.2%, despite the company's ongoing aggressive share buyback program, which saw it repurchase 1.118 million shares just a day prior.
South Korea and Japan Maneuver to Combat Inflation
To shield its economy from the "oil shock" of early 2026, South Korea has officially moved to apply zero tariffs on Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG). The Ministry of Economy and Finance announced that the 0% quota rate will apply through the second half of the year, effectively waiving the previous 1-2% duties to lower utility and transportation costs.
Meanwhile, the Japanese government issued 2.8 trillion yen ($17.8 billion) in Treasury discount bills. This issuance occurs as Japanese Government Bond (JGB) yields face upward pressure following hawkish signals from the Bank of Japan, which is widely expected to raise its key interest rate to 1.0% to combat a weak yen and persistent wholesale inflation.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.