Kospi surges 2% as US-Iran talks cool oil panic across Asia

Asian equities kicked off the week with a broad relief rally after US-Iran diplomatic talks tempered fears of a prolonged Strait of Hormuz blockade.

South Korea's Kospi surged more than 2% Monday as US-Iran talks eased fears of a prolonged Strait of Hormuz blockade that had pushed Brent above $82.

J.P. Morgan Global Research projects Brent crude averaging between $60 and $90 a barrel later this year, a wide range that reflects the uncertainty over whether the interim deal can survive the 60-day negotiation period.

Brent crude futures climbed $1.09, or 1.35%, to $81.66 a barrel after touching a high of $82.30 at the start of trading, as traders weighed the bumpy start to talks between US Vice President JD Vance and Iranian officials in Switzerland. The meeting in Buergenstock marked the first face-to-face encounter under a 60-day interim peace deal signed last week.

The relief across Asian markets remains fragile. Iran announced Saturday it had reimposed its blockade of the Strait of Hormuz, which carries one-fifth of global oil supplies, after accusing Israel of violating cease-fire terms in Lebanon. US officials disputed the closure, saying 55 merchant ships crossed Saturday, but the conflicting signals leave investors guessing whether the diplomatic track can hold.

The Kospi's gains were mirrored across the region. Japan's Nikkei 225 and Hong Kong's Hang Seng Index both advanced as the prospect of easing crude prices reduced inflationary pressure on import-dependent Asian economies. About 80 million barrels of crude had lined up to exit the Strait of Hormuz before the latest blockade announcement, according to earlier reports, a figure that shows the volume of supply trapped by the standoff.

The talks in Switzerland included mediators from Qatar and Pakistan, with Pakistani Prime Minister Shehbaz Sharif and army chief Field Marshal Syed Asim Munir arriving Sunday. Iran's delegation included Foreign Minister Abbas Araghchi along with senior security, central bank and oil officials, while the US team included envoys Steve Witkoff and Jared Kushner. Iranian Foreign Ministry spokesperson Esmail Baghaei said the talks would last only one day and would focus on implementing the memorandum rather than substantive nuclear negotiations.

A Hebrew University poll provided to Reuters showed 92% of Israelis believe Iran benefited more than Israel from the joint military campaign, a finding that highlights the strategic stakes behind the negotiations. President Donald Trump, who launched the war with Israel on Feb. 28, said he approved the interim deal to avert a global depression threatened by high oil prices. The war's stated goals — destroying Iran's nuclear program, stopping its missile threats and helping Iranians overthrow their government — have not been met, though US officials say they have severely damaged Iran's military.

The next test for markets is the outcome of the 60-day nuclear negotiation window. If talks progress, the US has said it will lift sanctions, potentially unlocking billions of dollars in frozen Iranian assets and allowing oil to flow freely from the Persian Gulf. If they break down, the Strait of Hormuz blockade could return in full force, sending oil prices sharply higher and reversing Monday's gains.

This article is for informational purposes only and does not constitute investment advice.