Oil prices rise as Iran war drags on, but US stocks hang near records

Oil prices are rising on Tuesday as the war with Iran threatens to drag on, but the US stock market is nevertheless hanging near its record heights.

The price for a barrel of Brent crude oil climbed 2.9% to settle at US$104.21 after President Donald Trump said the US-Iran ceasefire was on “life support” after he rejected Iran's latest proposal to end their war. The rejection raises the stakes for Trump’s trip this week to China, where he could urge President Xi Jinping to pressure Iran into making concessions. Xi has leverage because China is the biggest buyer of Iran’s sanctioned crude oil.

The war has already sent the price for a barrel of Brent up from roughly US$70 and delivered a blast of painful inflation through the global economy. That’s because it has shut the Strait of Hormuz and kept oil tankers stuck in the Persian Gulf instead of delivering crude to customers worldwide.

Still, the US stock market has been setting records recently on hopes that the war will not keep oil prices high for very long. Companies are meanwhile producing even bigger profits than analysts expected, while signals suggest the US economy is holding up even though households are feeling discouraged by expensive gasoline and tariffs.

On Wall Street, the S&P 500 added 0.1% to its record set Saturday. The Dow Jones Industrial Average was up 14 points, or less than 0.1%, with an hour remaining in trading, and the Nasdaq composite was virtually unchanged from its own all-time high.