Gold prices climbed more than 2 percent ‌on Wednesday after US President Donald Trump indicated a possible peace deal may be reached with Iran, sending the dollar and crude lower as inflation concerns ebbed somewhat.

Spot gold jumped 2.7 percent to $4,680.91 per ounce, ​as of 0811 GMT, having hit its highest since April 28. US gold ​futures for June delivery rose 2.7 percent to $4,693.20.

US President Donald Trump said on Tuesday he would briefly pause an operation to help escort ships through the Strait of ​Hormuz, citing progress toward a comprehensive agreement with Iran.

Iran will only accept “a fair and comprehensive ​agreement” in its negotiations with the US on ending the war in the Middle East, its foreign minister said on Wednesday.

Gold gained as “oil prices retreated on reduction in geopolitical risk premium, after the US ​confirmed that the ongoing fragile ceasefire between Iran is still intact, despite the skirmish that ​was seen at the start of this week,” Kelvin Wong, a senior market analyst at OANDA, said.

“Any signs ‌of re-escalation of tension between the two of them, you will see gold prices seeing some form of profit-taking, or for short-term speculators to unwind their near-term net long position in gold,” Wong added.

A weaker US currency makes dollar-priced metals cheaper for holders of other ​currencies.

Elevated crude oil prices ​can stoke inflation, increasing the likelihood of higher interest rates. While gold is considered an inflation hedge, high interest rates make yield-bearing assets more attractive, weighing ​on its appeal.

Investors await US non-farm payrolls later this week which will ​test whether the economy remains resilient enough to keep the Federal Reserve’s monetary policy on hold.

“Factors such as economic growth risks, worsening geopolitical relations, currency volatility and downside risks to equity markets will continue ​to support gold’s role as a portfolio diversifier,” ANZ ​said in a note.

Oil prices extended declines ​on Wednesday, slumping to two-week lows after a Pakistani source said that the ‌United States and Iran were nearing an initial peace deal.

Brent crude futures fell by $9.08, or 8.3%, to $100.79 a barrel by 1205 GMT, having earlier dropped below $100 for the first time since 22 April. US West Texas ​Intermediate lost $9.12, or 8.9%, to $93.15.

Both benchmarks were on track for their biggest daily ​declines in absolute and percentage terms since mid-April and hit their lowest in ⁠two weeks, having shed about 4% in the previous session.

A source from mediator Pakistan ​said the United States and Iran were closing in on an agreement on a one-page memorandum ​of understanding.

US media outlet Axios reported that the US expects Iranian responses on several key points in the next 48 hours, citing sources saying this was the closest the parties had come to an agreement ​since the war began.

Iran had said earlier that it would only accept a fair and comprehensive ​agreement.

The US military said on Monday that it destroyed several Iranian small boats as part of efforts to ‌help stranded ⁠ships to exit the Strait of Hormuz.

Crude oil supply losses from halted marine traffic through the strait since the war began in February have driven up prices, with Brent trading last week at its highest since March 2022.

The Strait of Hormuz closure has resulted in a ​drawdown in global oil ​and fuel inventories ⁠as refineries try to offset production shortfalls.

US crude oil inventories fell for a third week, while gasoline and distillate stocks also declined, market ​sources said on Tuesday, citing American Petroleum Institute figures.

Crude stocks fell ​by 8.1 ⁠million barrels in the week ended 1 May, the sources said. Gasoline inventories were down by 6.1 million barrels from a week earlier and distillate inventories fell by 4.6 million barrels, the ⁠sources said.

Official ​numbers from the EIA, the statistical arm of the ​US Department of Energy, are due at 1430 GMT.

Vacuum cleaners and vapes could get more expensive if the Iran war drags on for much longer, Chinese factory owners and traders warn, as the world’s manufacturing hub reels from “crazy” costs.

Weeks of US-Israeli strikes on Iran and the effective closure of the Strait of Hormuz have choked Asia’s oil supply, stymieing the production of plastic -- derived from oil -- across the region.

Manufacturing giant China has been comparatively sheltered from fuel shortages thanks to oil reserves and renewable energy, but local factories are picking up a ballooning raw materials bill.

“Basically, we’ve been losing money on all our orders,” said Bryant Chen, a manager at vacuum cleaner factory RIMOO in southern Guangdong province’s Foshan.

The price of plastic has risen roughly 50 percent since before the Iran war, Chen told AFP as workers behind him fastened suction tubes to metal tanks.

“The costs of the products that we are making are being very greatly affected,” the 42-year-old said, listing plastic, copper for the vacuum’s motor and raw materials in its power cords.

“Typically at this time we’d be entering peak season, but compared to the same period previously, shipment and production data aren’t very optimistic.”

Two hours away, plastic traders in storage hub Zhangmutou said price fluctuations were the worst they’ve seen in decades.

“It has never been this crazy,” said Li Dong, 46, who entered the industry two decades ago.

The plastic, rice-sized pellets he buys for local phone case and EV battery factories jumped wildly in March, triggering days of panic that jammed the small town’s roads as factories rushed to stock up.

‘MUTUAL STATE OF DECLINE’

Exporters in Zhangmutou showed AFP a vast range of products their pellets would become, including drones and badminton birdies.

One trader sifted through pink, green and purple beads that she said would be moulded into e-cigarette casings sold in the Middle East.

The Iran war has hit plastic production even harder than bottlenecks caused by the Covid pandemic, when ships could not come and go from China, Li said.

Some sellers cashed in on the plastic panic, he added, fighting to take advantage of surging costs.

Li said the price of plastic had dropped around 10 to 20 percent from its height, but he cautioned against further oil hold-ups.

“The factories we supply to will suffer the most because their direct costs will rise,” he said.

For exporters, the Middle East crisis has added to the hangover still lingering from Donald Trump’s sweeping global tariffs last year.

The US Supreme Court struck down those levies as illegal, but tolls on Chinese goods entering the US still sit at around 20 percent.

On the outskirts of Guangzhou, one garment factory owner lamented the chaos triggered by the US President’s trade war.

Overseas clients are afraid to place orders, while Chinese manufacturers cannot pin down changing costs.

“As a result, everyone is in a mutual state of decline,” garment boss Zhou, 55, said.

While 80 percent of his clients have returned, the fabrics scattered on his factory floor made into sweatpants headed for Europe and North America have risen 10 to 20 percent in cost due to the Middle East war.

As overseas orders dropped, seamsters went months without a job.

‘TENSIONS RISE, ORDERS DISAPPEAR’

Migrant worker Jingjing returned to her hometown in Hubei province for two months, where she made half the 400 yuan ($60) she now earns in Guangzhou’s garment factories.

“When tensions rise... orders suddenly disappear,” the 42-year-old said.

But this year she said she always has something to do.

In a damp back alley, Jingjing joined job-seekers milling about leisurely, haggling for higher wages while garment bosses perched on scooters brandished hiring signs, desperate for day labourers.

Chen, the vacuum factory manager, said he was “still worried” about surging shipping costs should the Iran war drag on.

“If shipping costs rise, it will cause the final costs for our customers to increase sharply,” he said.

They “will have no way to sell normally, because the costs are just too high”.

Chen said RIMOO plans to expand to other markets beyond the Middle East where around 60 percent of its customers are based.

“We are still optimistic,” he said. “The market demand still exists.”

But analysts warn the war’s impact on costs will be felt for months.

“The problem is all of these costs will filter through the supply chains for the rest of the year,” said supply chain consultant Cameron Johnson.

“The longer it goes on, that kind of cascades into much bigger problems, particularly if there’s not enough oil in general to run stuff.”

Stocks leapt, oil prices sank and the dollar dropped in the Asian morning on Wednesday after US President Donald Trump touted "great progress" towards a "final agreement" with Tehran, while momentum in AI-driven trades accelerated.

Trump said he would briefly pause an operation escorting ships through the Strait of Hormuz, which carries about a fifth of global oil and has been blockaded by Iran since late February, triggering a global energy crisis.

The news sent Brent crude tumbling 1.2% to $108.51 per barrel, while S&P 500 e-mini futures were up 0.3%.

MSCI's broadest index of Asia-Pacific shares outside Japan jumped 2.3% to a fresh record, led by a 5.1% surge in South Korea's Kospi, clearing the 7,000 mark for the first time.

"Markets embraced a sense of calm and stability overnight, with the risk of escalation in the Middle East conflict viewed as having diminished after US Defence Secretary Pete Hegseth ensured the ceasefire was still in place, despite the US and Iran trading blows yesterday," analysts from Westpac wrote in a research note.

"This put some wind in the sails for risk sentiment, supporting a rebound in equities across the US and Europe at the same time as crude oil prices partially unwound yesterday's climb."

Stocks on Wall Street hit fresh records on Tuesday as the S&P 500 rose 0.8% and the Nasdaq Composite gained 1%.

"Investors bought and continue to add to positioning in the 2026 winners," said Chris Weston, head of research at Pepperstone Group Ltd in Melbourne. "There has been some buying in S&P 500 materials stocks, but it's tech that continues to attract the bulk of flows, notably in Apple and the memory plays."

As the Seoul market reopened after a holiday, Samsung Electronics jumped 12%, topping a $1 trillion market value, overtaking Berkshire Hathaway and closing in on Walmart.

"Due to the capex spend we are seeing from hyperscalers in the US, the earnings growth trajectory for sectors such as semiconductors, tech hardware, industrials and materials in Asia exceeds anything I have seen in a long-time," said Rushil Khanna, head of equity investments for Asia at Ostrum, an affiliate of Natixis Investment Managers.

"This capex is leading to material value creation in Asia as the provider of the picks and shovels to the AI ecosystem," he said.

Shares in Advanced Micro Devices jumped 16.5% in extended trading as the company forecast second-quarter revenue above Wall Street expectations on Tuesday, helped by keen demand for its dead-centre chips as cloud-computing companies accelerate spending on AI infrastructure.

In the foreign exchange markets, the US dollar index, which measures the greenback's strength against a basket of six currencies, snapped a three-day winning streak, nudging down 0.1% to 98.236.

The euro stood at $1.1724 and sterling was at $1.3577, both up around 0.3% so far on the day.

The Australian dollar fetched $0.7227, rising about 0.6% to the highest since June 2022, buoyed by improved risk appetite and underpinned by a third straight interest-rate hike a day earlier.

The yield on the US 10-year Treasury bond was flat at 4.424%.

Gold was 1.2% higher at $4,609.59. In cryptocurrencies, bitcoin was down 0.9% at $80,881.12, while ether was off 1% at $2,358.09.

The Asian Development Bank (ADB) has projected that oil prices will average $96 per barrel in 2026 -- well above the pre-war average of $69 -- as key infrastructure has been damaged and, despite the ceasefire in the Middle East, transit through the Strait of Hormuz has not resumed.

Prices may moderate to $80 on average in 2027, according to an updated ADB analysis on the impact of the Middle East conflict on Asia and the Pacific, released yesterday.

Fertiliser prices -- especially those of urea, a key crop nutrient -- have also shot up, fuelling inflationary expectations and increasing fiscal pressure on nations, particularly energy- and fertiliser-importing ones like Bangladesh.

The multilateral lender has lowered its 2026 growth projections for developing Asia and the Pacific, saying the conflict has proved far more disruptive than its early stabilisation scenarios suggested.

Regional GDP growth is now forecast at 4.7 percent, a 0.4 percentage-point drop, while the inflation estimate has been raised by 1.6 percentage points to 5.2 percent.

“Transit through the Strait of Hormuz remains severely impaired despite the April ceasefire. Physical damage to energy facilities across the Gulf will prolong supply disruptions beyond the end of the conflict -- with some repairs expected to take three to five years,” said ADB Chief Economist Albert Park.

“A new reference scenario incorporating persistent supply constraints points to materially slower growth and higher inflation; a severe downside scenario implies substantially larger impacts,” he said at a media briefing on the sidelines of the ADB Annual Meeting in Samarkand, Uzbekistan.

The four-day event concluded yesterday with ADB President Masato Kanda terming the conference a success at the closing ceremony.

Park said impacts depend on imported energy dependency, fertiliser import exposure, and other economy-specific factors. Across subregions, the largest 2026 growth downgrades have occurred in South Asia, the Pacific, and developing Southeast Asia.

The Manila-based agency now projects a 5.7 percent growth in South Asia in 2026, down from an earlier forecast of 6.3 percent. Inflation in the subregion is projected to rise to 7.6 percent, up 2.6 percentage points from the previous estimate.

“Markets price in persistently tighter conditions, not a quick reversal.”

The ADB said supply disruptions have exerted upward pressure on the prices of non-oil commodities, particularly fertilisers.

“Prices are surging,” Park said, adding that urea marked the largest non-energy price shock and that it has a direct impact on food costs.

South Asia sources 35 percent of its fertiliser from the Middle East. Bangladesh is a major importer of fertiliser from the Gulf nations.

“Food prices typically follow within one quarter,” he added.

Responding to a question on Bangladesh’s economic growth, he said the country-specific numbers for Bangladesh based on the reduced growth forecast will be released by the end of this month.

“So, the regional one is an indicator; I think Bangladesh’s growth will probably be a bit lower. They would have more headwinds, in effect, than the rest of the South Asia average,” he said.

“But I think you should wait; our next Asian Development Outlook will have a much more thorough assessment of Bangladesh, and that report will be coming out in July or early August,” he said.

To tackle the challenges, the ADB suggested avoiding blanket fuel subsidies and excise tax cuts.

High-income households consume more energy, and subsidies are fiscally very costly if prices stay elevated, he said.

“Policymakers should target support to vulnerable households, maintain monetary credibility, and accelerate investment in energy resilience,” he said.

Park suggested targeted cash transfers to protect vulnerable households and ensure fiscal space. A data-dependent monetary policy is needed.

“This is a supply shock, not a demand shock. Monitor inflation expectations and second-round effects before tightening; avoid choking growth unnecessarily,” he added.

The dollar fell against most major currencies on Wednesday after the US signalled it may be nearing a deal with Iran, while the Japanese yen suddenly jumped to a more than two-month high as markets braced for ​another round of official buying from Tokyo.

The yen rose by as much as 1.8 percent earlier in a swift ‌move that left the dollar at a session low of 155, around its weakest since February 24. The dollar had earlier broadly strengthened against a range of currencies before a sudden move lower against the yen, which triggered speculation of another round of intervention.

Japanese Finance Minister Satsuki Katayama ​earlier in the week warned against speculative moves in foreign exchange, after a brief jolt higher in the yen sparked ​speculation Tokyo had again intervened to support the currency.

“As I have said repeatedly, we will take decisive measures against speculative moves, in accordance with the statement signed between Japan and the United States last year,” Katayama told ​reporters after the Asian Development Bank’s annual meeting in Uzbekistan. The Ministry of Finance of Japan could not be reached immediately for ​comment during a local holiday.

Part of the problem for Japanese authorities in staving off persistent weakness in the yen lies in markets that are beyond their immediate control, such as higher US Treasury yields, which favour the dollar, and oil, CIBC Capital Markets head of G10 FX strategy Jeremy ​Stretch said.

“It’s very tough to get the yen down if oil is going to remain elevated and/or US Treasury yields ​are, in terms of 10-years, you’re nearer 4.4 percent than you are 4.2 percent. So that was always going to be the difficulty the Japanese were ‌going to have.

The fact that we’ve been able to get it back to 156.5, given the fact that we’ve still got 10-year yield at 4.42 percent and oil is still closer to $100 than 75, I guess, is some degree of success,” he said.

Most other major currencies also extended gains as dollar weakness persisted, after President Donald Trump said he would briefly pause an operation to ​help escort ships through the Strait ​of Hormuz, citing progress towards ⁠a comprehensive agreement with Iran.

That came shortly after US Secretary of State Marco Rubio said on Tuesday that the United States had achieved its objectives in its military campaign against Iran.

The market capitalisation of Samsung Electronics' common stock surpassed $1 trillion on Wednesday, making it the second Asian company after TSMC to reach the milestone.

Samsung Electronics, the world's top memory chipmaker, saw its market value reach 1,500 trillion won ($1.03 trillion) in early trading in Seoul on Wednesday, tracking sharp gains of AI-related stocks in the US overnight.

Shares of the South Korean chip giant were up 12% at 09:52 am (0052 GMT) in Seoul, outstripping the benchmark Kospi's 5.4% gain.

The S&P 500 and the Nasdaq notched record-high closes on Tuesday, lifted by Intel and other AI-related stocks, as a US-Iran ceasefire held and investors focused on strong quarterly earnings.

Oil prices eased ​1 percent on Tuesday after climbing by as much as 6 percent in the previous session on signs the US Navy ‌is loosening Iran's grip on the Strait of Hormuz, potentially opening up supply from the Middle East.

The US on Monday launched a new operation aimed at reopening the strait to shipping. Maersk later said the Alliance Fairfax, a US-flagged vehicle carrier, exited the Gulf via the strait accompanied by the US military, easing ​some supply disruption fears.

Brent oil futures for July fell 51 cents, or 0.5 percent, to $113.93 per barrel at 0622 GMT after ​settling up 5.8 percent on Monday. US West Texas Intermediate (WTI) crude fell $1.55, or 1.5 percent, to $104.87, after gaining 4.4 percent ⁠in the previous session.

"The successful escorted exit of the Maersk-operated vessel has helped ease some immediate supply disruption fears," said Tim Waterer, ​chief market analyst at KCM Trade.

"It shows that limited safe passage is possible under current conditions and helps chip away at some of ​the worst-case supply disruption fears. However, it's still very much a one-off event rather than a full reopening," he said in an email.

Still, Iran launched attacks in the Gulf on Monday to counter the US move as they wrestle for control over the Strait of Hormuz, which connects the Gulf to wider markets ​and typically carries oil and gas supply equal to about 20 percent of global demand every day.

Several commercial vessels were reportedly struck in ​the area, while a key oil port in the United Arab Emirates was set ablaze after an Iranian strike. Trump's attempt to use the US ‌Navy ⁠to free up shipping is the war's biggest escalation since a ceasefire was declared four weeks ago.

The US is pushing to open Hormuz to ease a massive disruption to global energy supplies since Iran mostly shut the strait after the US and Israel started the war on February 28.

Some analysts attributed the slight drop in oil prices on Tuesday to profit-taking moves.

"The recent dip does look like a bit ​of profit-taking after a strong ​run-up, rather than a structural ⁠shift in the backdrop," said Priyanka Sachdeva, a senior market analyst at Phillip Nova. "The geopolitical risk premium tied to the Strait of Hormuz remains firmly in place, so the downside is likely to stay ​limited."

"In the very near term, prices could see some consolidation or mild pullback as markets reassess ​positioning and react ⁠to mixed diplomatic signals."

On Monday, Chevron Chairman and CEO Mike Wirth said physical shortages in oil supply would begin appearing around the world because of the Hormuz closure.

Because of the disruptions, global oil stocks are approaching their lowest level in eight years, Goldman Sachs said on Monday, warning that ⁠the speed ​of depletion was becoming a concern as supplies remained restricted.

"With the world rapidly ​burning through commercial stockpiles, strategic reserves, and crude held in floating storage, the underlying supply squeeze remains a potent tailwind for oil prices," IG market analyst Tony Sycamore ​said in a note.

Brent crude futures retreated on ​Tuesday but held near $114 a barrel following fresh hostilities in the Middle East, while investors ‌monitored developments in the US-Israeli conflict with Iran.

The US and Iran launched new attacks in the Gulf on Monday as they wrestled for control over the Strait of Hormuz with duelling maritime blockades, shaking a fragile truce.

Brent crude futures eased 93 ​cents, or 0.8 percent, to $113.51 per barrel at 0719 GMT after settling up 5.8 percent on Monday. ​US West Texas Intermediate (WTI) crude fell $2.16, or 2 percent, to $104.26, after gaining 4.4 percent in the previous session.

“Prices continue to trade in a highly volatile range, driven largely by ongoing tensions in the ​Strait of Hormuz,” said Phillip Nova’s senior market analyst Priyanka Sachdeva.

“While prices have eased slightly in recent ​sessions, this is not due to any real improvement in fundamentals, but rather a temporary relief after the US launched ‘Project Freedom’,” she added.

The US on Monday launched a new operation aimed at reopening the strait to shipping. Maersk later said the ​Alliance Fairfax, a US-flagged vehicle carrier, exited the Gulf via the strait accompanied by the US military.

“It shows ​that limited safe passage is possible under current conditions and helps chip away at some of the worst-case supply disruption ‌fears,” said Tim Waterer, chief market analyst at KCM Trade in an email.

“However, it’s still very much a one-off event rather than a full reopening,” he added. Still, Iran launched attacks in the Gulf on Monday to counter US moves for control over the Strait of Hormuz, which connects the Gulf to wider markets and typically ​carries oil and gas ​supply equal to about 20 percent of global demand every day.

Several commercial vessels were reportedly struck in the area, while a key oil port in the United Arab Emirates was set ablaze ​after an Iranian strike. Trump’s attempt to use the US Navy to ​free up shipping is the war’s biggest escalation since a ceasefire was declared four weeks ago.

“Markets may find some relief today following President Trump’s overnight comments suggesting the conflict could continue for another two to three weeks,” said ING analysts in ​a client note.

However, there is considerable scepticism in the market ​on this view, given the recent escalation and the repeated extensions of projected timelines for ending hostilities since the conflict began, they ​added.

Governments in Asia, the top oil importing region, are scrambling to find alternatives and insulate their economies from the worst of the energy crisis triggered by the Iran war, but the pain is getting increasingly costly.

The disruption spurred the Asian Development Bank to cut its growth forecast for developing Asia and the Pacific to 4.7% this year and 4.8% in 2027, down from 5.1% for both years previously, and lifted its inflation outlook to 5.2% for this year.

Overall oil imports to Asia, which takes 85% of Gulf crude shipments, plunged 30% in April on the year, to their lowest since October 2015, Kpler data shows, after two months of the near-closure of the Strait of Hormuz, a key chokepoint for a fifth of global oil and gas supplies.

Fiscal strains are mounting across the region, particularly South Asia, as governments spend billions of dollars on subsidies and import duty waivers to compensate.

"The first line of defence ... is that the governments decided to absorb the initial shock by either providing subsidies or cutting excise duties on fuel products," said Hanna Luchnikava-Schorsch of S&P Global Market Intelligence.

India's state-dominated refining sector has kept fuel prices steady despite surging crude costs, losing about 100 rupees ($1.06) a litre on diesel and 20 rupees on petrol, but some analysts forecast price hikes after state polls ended in April.

Many regional governments have moved to limit fuel use or clamp down on hoarding, while several have curbed exports and many, including Australia, have espoused diplomatic efforts to ensure access.

China, the world's biggest oil importer, has shielded itself with sizeable reserves, a diverse energy supply chain and export curbs on fuel and fertiliser, although Beijing is making exceptions for some regional buyers, from Australia to Myanmar.

Even as governments tap fiscal resources, forex reserves and oil inventories, the war's economic impact on Asia has not been as bad as feared, Goldman Sachs said.

Nevertheless, it trimmed 2026 growth forecasts for Japan and some Southeast Asian countries and slightly lifted inflation expectations, while warning of a key unresolved question.

"How much of the resilience thus far reflects structural factors versus unsustainable declines in buffer stocks?" its analysts said in a note.

First lines of defence

Asia's emerging market currencies have fallen furthest and to lower lows against the dollar, compared with global peers and the region's bigger currencies, with the peso, rupee and rupiah all making record lows.

Since the war started at the end of February, the Philippine peso has dropped more than 5%, the Thai baht and rupee more than 3% each and the rupiah more than 2.5%.

By contrast China's yuan is the region's top performer, up 0.8% against the dollar, while Japan has intervened to push up the yen, to stand 0.4% higher than pre-war levels. South Korea's won is down about 1.1%.

The South Asian economies of Pakistan, Bangladesh and Sri Lanka are the most vulnerable to the burdens triggered by the crunch, S&P Global Market Intelligence said.

Pakistan, for example, recently issued its first tenders since 2023 to buy liquefied natural gas.

It is looking to replace supply it is unable to source from Qatar, paying $18.88 per million British thermal unit for one cargo, or roughly $30 million more than market prices before the war, according to Reuters calculations.

"These countries use more of their resources on subsidising domestic public energy enterprises and basically shielding the final consumers from the energy price shock," added Luchnikava-Schorsch, the S&P unit's head of Asia-Pacific Economics.

"These are also the countries which have the slimmest fiscal buffers."

Still, regional economies are better positioned than when the start of the Ukraine war in 2022 triggered the last energy shock, she said.

Coping mechanisms

Responses across Asia are shaped by the circumstances of individual nations.

For example, energy producer Indonesia has told operators to prioritise the domestic market over exports and is halting LNG shipments that were not under contract.

Southeast Asia's biggest economy is also looking to Africa and Latin America to replace Middle Eastern oil, and plans to buy 150 million barrels from Russia by year-end.

In Thailand, a source at a state-owned refiner said the firm had paused crude purchases as national stocks of refined products rose after refineries stepped up output and a government ban closed off exports.

At the same time, curbs on energy use and high prices have led to falling demand, he added.

Japan, which buys 95% of its oil from the Middle East, has stepped up purchases of US oil, paying spot market prices that soared after the start of the war, plus the cost of shipping from the US, which takes twice as long as from the Gulf.

On Friday, Japan began releasing 36 million barrels of crude from stockpiles, its second release since the start of the war.

Oil prices fell for a second day on Wednesday on expectations bottled up supply from the key Middle East producing region could resume flowing after US President Donald Trump indicated a possible peace deal may be reached to end the war with Iran.

Brent crude futures for July fell $1.52, or 1.38%, to $108.35 per barrel as of 0103 GMT, after dropping 4% in the previous session. US benchmark West Texas Intermediate futures for June declined $1.50, or 1.47%, to $100.77, after closing down 3.9% the day before.

On Tuesday, Trump unexpectedly said he would briefly pause an operation to help escort ships through the Strait of Hormuz, citing progress towards a comprehensive agreement with Iran, without giving details on the agreement.

There was no immediate reaction from Tehran, where it was very early on Wednesday morning.

Still, Trump said the US Navy would continue its blockade of Iranian ports. The Strait of Hormuz, which typically carries cargoes equal to about one-fifth of the world's oil and natural gas supply, has been most cut off since the US-Israeli war against Iran began on 28 February.

The supply loss to the global market has pushed prices higher with Brent trading last week at its highest since March 2022.

"We have mutually agreed that, while the Blockade will remain in full force and effect, Project Freedom ... will be paused for a short period of time to see whether or not the Agreement can be finalised and signed," Trump wrote on social media.

Trump's announcement came only hours after US Secretary of State Marco Rubio briefed reporters on the effort, announced on Sunday, to escort stranded tankers through the strait. On Monday, the US military said it had destroyed several Iranian small boats, as well as cruise missiles and drones, while guiding two vessels out of the Gulf through the strait.

The Strait of Hormuz closure has drawn down global inventories as refineries try to make up the shortfall.

US crude oil inventories fell for a third week, while petrol and distillate stocks also declined, market sources said on Tuesday, citing American Petroleum Institute figures.

Crude stocks fell by 8.1 million barrels in the week ended 1 May, the sources said. Petrol inventories fell by 6.1 million barrels, while distillate inventories fell by 4.6 million barrels compared to a week earlier, the sources said.

Oil prices edged higher on Monday, supported by the absence of a US-Iran peace deal that kept supplies constrained and prices above $100 a barrel.

Brent crude futures were up 67 cents, or 0.6%, to $108.84 a barrel at 0400 GMT after settling down $2.23 on Friday. US West Texas Intermediate was up 65 cents, also 0.6%, at $102.59 a barrel, after a $3.13 loss on Friday.

"The broader market remains tightly supported by persistent supply disruptions and geopolitical uncertainty," said Priyanka Sachdeva, analyst at Phillip Nova.

"Unless there is a clear and sustained resolution that restores normal flows through the Strait of Hormuz, oil prices are likely to remain elevated, with risks still tilted toward further upside."

President Donald Trump said the US would begin efforts to assist ships stranded in the Strait of Hormuz, but prices stayed above $100 a barrel, with no peace deal in sight and shipping through the strategic waterway still constrained.

Negotiations between the US and Iran continued over the weekend, with both sides assessing each other's responses.

Trump has made securing a nuclear deal with Tehran a priority, but Iran wants to defer nuclear talks until after the war and first lift rival blockades on Gulf shipping.

On Sunday, the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, said it would raise oil output targets by 188,000 barrels per day in June for seven members, marking the third consecutive monthly increase.

The rise matches that agreed for May, minus the share of the United Arab Emirates, which left OPEC on May 1. However, the additional barrels are expected to remain largely on paper as long as the Iran war continues to disrupt Gulf oil supplies through the Strait of Hormuz.

Wondering whether you can find better investment returns than the US stock market without turning your portfolio into a guessing game?

Right now, you can.

Using the latest justETF country rankings from 3 May 2026, we found a clear group of overseas markets beating the S&P 500 on the 2026 return table. We have centred this page on eight that are practical for US readers who use country ETFs and broader international ETFs.

We will show you where the returns are, what is driving them, and how to think about the risk before you buy.

Which countries currently outperform US stock market?

If you want the short answer, several countries are ahead of the US stock market right now. On justETF's country table updated on 3 May 2026, the S&P 500 shows a 2026 return of 6.14% in euro terms, and each market below sits above that line.

That gives you a clean scoreboard, but it does not equal your exact dollar return in a US brokerage account. Currency moves, local market hours and the specific ETF you choose can all shift the result.

Use the 2026 column for the clearest "right now" comparison.
Use the 1-year figure to see whether the move has depth.
Check the ETF structure because an 81-stock fund behaves very differently from a 178-stock fund.

Market

2026 return

1-year return

Popular US-listed ETF

Quick read

United States

6.14%

25.41%

SPY

Your benchmark

South Korea

62.04%

65.39%

EWY

Huge momentum, heavy AI and semiconductor exposure

Taiwan

41.27%

38.78%

EWT

Strong chip-cycle exposure, higher valuation

Turkey

26.36%

24.53%

TUR

Strong gains, very uneven ride

Brazil

22.30%

27.98%

EWZ

Cheaper market, income support, cyclical risk

Mexico

10.46%

35.84%

EWW

Concentrated market tied closely to North America

Japan

9.56%

26.50%

EWJ

Broader market, lower volatility than most on this list

Poland

9.15%

33.26%

EPOL

Value and yield, but very concentrated

Canada

8.49%

34.80%

EWC

Familiar market structure, moderate risk

Quick takeaway: You do not need to chase only the hottest emerging markets. This list includes both high-octane moves, such as South Korea, and steadier developed markets, such as Japan and Canada, which gives you more than one way to diversify a global portfolio.

Why is South Korea a strong investment choice right now?

South Korea is the clear leader. It is up 62.04% for 2026 and 65.39% over one year on the justETF table, which is far ahead of the United States and even ahead of most other emerging markets.

In a March 2026 market note, iShares highlighted South Korea's role in AI infrastructure and semiconductor manufacturing, and its EWY fund gives you exposure to names such as Samsung, SK Hynix, Hyundai Motor and KB Financial.\

That is powerful if you want direct access to the hardware side of the AI revolution, but EWY held only 81 stocks on 1 May 2026 and showed a three-year standard deviation of 34.38%, so this is better used as a tactical position than as the centre of your portfolio.

Best fit: investors who want direct exposure to the AI supply chain.
Main risk: big swings, because this market can move much faster than the S&P 500.

What makes Taiwan's market returns attractive?

Taiwan sits in second place, with a 2026 return of 41.27% and a one-year return of 38.78%. If you want a market that benefits when global demand for advanced chips stays strong, Taiwan is one of the cleanest country ETF ideas you can buy.

The US-listed EWT fund held 85 stocks on 1 May 2026 and carried a five-star Morningstar rating as of 30 April 2026, which tells you the recent risk-adjusted record has been strong. The trade-off is price: its portfolio P/E stood at 26.52, so you are paying up for quality and momentum.

How is Turkey delivering better investment returns?

Turkey is up 26.36% for 2026 on the justETF ranking, which keeps it comfortably ahead of the US. That makes it one of the strongest momentum markets on this page.

The diversification case is real, too. TUR showed a three-year beta of 0.30, so it has not simply copied the path of US stocks, yet its three-year standard deviation was still 26.90%, which tells you the ride can be rough.

Why it can help: it can add a return stream that behaves differently from a US-heavy portfolio.
Why it can hurt: local volatility and currency risk can wipe out gains very quickly.

Why consider investing in Brazil at present?

Brazil's 2026 return stands at 22.30%, with a 27.98% one-year gain and a 46.41% three-year return. For readers who want emerging markets exposure without paying growth-stock multiples, Brazil deserves a serious look.

EWZ held 46 stocks on 1 May 2026, carried a portfolio P/E of 11.43 and had a trailing yield of 4.32%. In simple terms, you are buying a cheaper market with meaningful income, but you are also taking on heavy exposure to banks, commodities and the domestic cycle.

Why does Mexico belong on this list?

Mexico is not in the top four, yet it still beats the US stock market with a 10.46% gain on the justETF table. I like it for readers who want foreign exposure that still feels closely linked to North American manufacturing and consumer demand.

EWW had 40 holdings on 1 May 2026, a 0.50% expense ratio and a four-star Morningstar rating, while its one-year total return was 53.20% as of 31 March 2026. That is appealing if you want a tighter, more focused country fund and you can handle the concentration.

Best fit: investors who want international exposure without moving too far from the US economic orbit.
Watch out for: a narrow stock base, because 40 holdings can magnify sector moves.

What factors make Japan a calmer winner?

Japan offers a different kind of outperformance. The 2026 return is 9.56%, which is far less dramatic than South Korea, but it still tops the US and does so with a broader market base.

EWJ held 178 stocks on 1 May 2026, its three-year standard deviation was 13.13%, and its expense ratio was 0.49%. If you want developed markets exposure that does not lean so hard on one story, Japan is one of the steadier country ETFs on this list. If currency swings worry you, HEWJ is the hedged version, though the fee is higher.

Why is Poland worth a closer look?

Poland has a 2026 return of 9.15% and a one-year return of 33.26%, so it clearly earns a place here. It can suit investors who want European exposure without defaulting to larger benchmarks such as Germany, France or the United Kingdom.

EPOL is a focused fund, with just 33 holdings, a portfolio P/E of 12.10 and a trailing yield of 4.67% on 1 May 2026. That combination can look attractive if you like value and income, but each major holding has a lot of influence over your result.

What stands out: one of the stronger yields in this group.
Main risk: concentration, because 33 holdings leave little room to hide.

How does Canada round out the list?

Canada closes the eight-country shortlist with an 8.49% 2026 return and a 34.80% one-year gain. For many US investors, it is the easiest international market to hold because the market structure feels familiar and the risk is easier to read.

EWC held 84 stocks on 1 May 2026, had a three-year standard deviation of 14.20% and charged 0.50%. That makes Canada a useful middle ground: more diversified than Brazil or Poland, less volatile than South Korea or Turkey, and still ahead of the US stock market in 2026.

How should you use these markets in a portfolio?

You do not need eight country ETFs in one account. In a March 2026 update, iShares said flows into single-country ETFs had already exceeded the total for all of 2025, led by South Korea and Brazil, which shows real investor interest, but interest and good portfolio design are not the same thing.

A simpler investment strategy usually works better. Use broad international ETFs for the core of your global portfolio, then add a country ETF only when you have a clear reason for it.

Use VXUS or IXUS as a base if you want broad developed markets and emerging markets exposure outside the United States.
Add one country ETF for a clear theme, such as South Korea for AI hardware or Japan for a steadier developed-market tilt.
Keep currency in mind, because the justETF scoreboard is in euros while your brokerage account is in dollars.
Check concentration before you buy, because a 33-stock fund is a very different risk from a 178-stock fund.

Final words

The US stock market still deserves a core place in most portfolios, but it is not leading every race right now. On the latest justETF ranking, South Korea, Taiwan, Turkey, Brazil, Mexico, Japan, Poland and Canada all offer better investment returns than the US stock market on the 2026 table.

If you want to act on that, keep it simple: use international ETFs for your base, add country ETFs only when the case is clear, and respect currency and concentration risk. That is how you stay diversified without turning your global portfolio into a pile of hot trades.

FAQs
1. Which countries beat the US stock market right now?

Poland, Canada, Greece, South Africa, Austria, Italy, the Netherlands, and the United Kingdom are showing higher returns than the US market at the moment.
2. Why are these places doing well now?

Some have cheap stocks, some have strong exports, and some ride a rebound in demand, for example Spain and New Zealand have tourism gains, Peru sees commodity lifts, and Israel shows tech strength.
3. Are emerging markets like Colombia, Chile, Indonesia, or Pakistan worth the risk?

They can pay off, but they move fast, and volatility is high, so only add them if you can take sharp swings; Norway also pops up for its oil and safe balance sheet.
4. Who has pointed this out, and is this a deep crash like the great depression?

Analysts such as Steven Cress have flagged the trend, and no, this is not a new great depression, it is a market shift, short of a long, deep slump in broad economies; Sweden and Switzerland show calm in parts of Europe.
5. How should I act on this news?

Think funds or ETFs that cover Poland, Canada or the others, spread risk, set a time plan, and check local rules; if you want safety, mix in blue chips from Italy or Austria, and keep an eye on news.

Saudi Arabia, Russia and five other OPEC+ countries increased their oil production quota on Sunday in an expected move aimed at demonstrating continuity at the cartel after the shock withdrawal of the United Arab Emirates.

The seven major producers will add 188,000 barrels per day to their total production quota for June amid the price pressure unleashed by the Mideast war, as part of "their collective commitment to support oil market stability", according to a statement published by OPEC+.

The statement, following an online meeting of Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia and Saudi Arabia, made no mention of the United Arab Emirates, which quit the body on Friday, three days after announcing its withdrawal.

Rystad Energy analyst Jorge Leon told AFP that the silence on the UAE's departure was a sign of tense relations.

Oil market analysts had widely expected the increase of 188,000 barrels, similar to the 206,000-barrel daily increases OPEC+ announced in both March and April when the portion allotted to the UAE was subtracted.

"By sticking to the same production path -- just minus the UAE -- it's acting as if nothing has happened, deliberately downplaying internal fractures and projecting stability," Leon said.

Strait of Hormuz bottleneck remains

But raising the quota on paper may not have much impact on actual production, which is already short of the limit.

Untapped OPEC+ reserves are mainly located in the Gulf region, and exports there are trapped by the blockade of the vital Strait of Hormuz, imposed by Iran in response to the US-Israeli strikes that started the war on February 28.

Leon, the Rystad Energy analyst, told AFP on Sunday that the cartel was looking to send "a two-layer message" that the UAE's exit would not disrupt how OPEC+ operates and that the group still exerts control over global oil markets despite massive disruption to oil trade due to the war.

"While output is increasing on paper, the real impact on physical supply remains very limited given the Strait of Hormuz constraints," Leon told AFP. "This is less about adding barrels and more about signalling that OPEC+ still calls the shots."

The Strait of Hormuz blockade is hitting Iraq, Kuwait, Saudi Arabia and the UAE. The latter's production will no longer count towards OPEC quotas.

"Total OPEC+ output with quota fell to 27.68 million bpd in March, against a monthly quota of 36.73 million bpd, a shortfall of approximately 9 million bpd driven almost entirely by war-related disruption rather than voluntary restraint," said Priya Walia, another analyst at Rystad Energy, ahead of Sunday's meeting.

Iran, whose exports are now the target of a retaliatory US blockade, is an OPEC+ member but is not subject to quotas.

Russia, the group's second-biggest producer, has been the main beneficiary of the situation. But despite soaring energy prices, it appears to be struggling to produce at the level of its current quotas as its own war in Ukraine drags on and Ukrainian drones hit oil industry facilities.

'A big deal'

Amena Bakr, an analyst at Kpler, described the UAE's exist as "a big deal" for OPEC.

Previous withdrawals from the group by Qatar in 2019 and Angola in 2023 were less significant by comparison, Bakr told a video conference on the UAE withdrawal.

The UAE has invested massively in infrastructure in recent years, and state-owned oil company ADNOC plans to increase output by five million barrels a day by 2027 -- far above the country's last quota of around 3.5 million barrels.

ADNOC also pledged on Sunday to spend $55 billion on new projects over the next two years, confirming that the company is "accelerating growth and delivery of its strategy".

There is also the risk for OPEC+ that other countries will leave such as Iraq and Kazakhstan, which have faced repeated accusations of surpassing their quotas.

The United Arab Emirates has left the Organization of Arab Petroleum Exporting Countries (OAPEC), an alliance that does not set production policies for its members, a statement from the intergovernmental organisation showed on Sunday.

The statement follows UAE's surprise announcement on 28 April of its departure from the OPEC and OPEC+ producer groups, to prioritise boosting its own output.

OAPEC was formed in 1968 with the aim of boosting cooperation among Arab oil exporters.

The Asian Development Bank (ADB) will back $70 billion in new energy and digital infrastructure initiatives by 2035, aiming to connect power grids, expand cross-border electricity trade, and improve broadband access across Asia and the Pacific.

The Pan-Asia Power Grid Initiative will connect national and subregional power systems so renewable energy can flow across borders, while the Asia-Pacific Digital Highway will help close the digital infrastructure gap and enable the region to benefit from AI-driven growth, reads a press release.

Under the Pan-Asia Power Grid Initiative, ADB will work with governments, utilities, the private sector, and development partners to mobilise $50 billion by 2035 for cross-border power infrastructure that can unlock renewable energy at scale.

The initiative will focus on transmission and grid integration, including cross-border lines, substations, storage, and grid digitalisation.

It will also support power generation linked to electricity trade, including renewable energy export projects, regional renewable hubs, and hybrid generation-storage facilities.

By 2035, ADB aims to integrate about 20 gigawatts of renewable energy across borders, connect 22,000 circuit-kilometers of transmission lines, improve energy access for 200 million people, create 840,000 jobs, and cut regional power sector emissions by 15%.

ADB expects to finance about half of the $50 billion initiative from its own resources and raise the rest through cofinancing, including from the private sector.

Up to $10 million in technical assistance will support efforts to align regulations, adopt common technical standards, prepare feasibility studies and advance other work needed for major projects.

The Pan-Asia Power Grid Initiative marks a shift from country-to-country energy links to a regional approach to power trade.

It builds on existing subregional cooperation initiatives, including the South Asia Subregional Economic Cooperation program, the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation grid interconnection planning, the ASEAN Power Grid, and the Central Asia Regional Economic Cooperation Energy Strategy 2030.

The Asia-Pacific Digital Highway will mobilise $20 billion by 2035 to finance digital corridors, data infrastructure, and AI-ready economies.

Investments will focus on connected infrastructure, including terrestrial and subsea fiber networks, satellite links and regional data centres.

ADB will also provide policy and regulatory support, including on cybersecurity risk management, and invest in skills programs to strengthen digital and AI readiness.

By 2035, the initiative aims to provide first-time broadband access to 200 million people and faster, more reliable digital connectivity for another 450 million people across the region.

It is expected to cut connectivity costs in remote and landlocked areas by about 40% and help create 4 million jobs.

ADB expects to finance $15 billion of the $20 billion initiative from its own resources and raise $5 billion through cofinancing, including from the private sector.

The Centre for AI Innovation and Development will be established in Seoul to support the initiative. Backed by a $20 million contribution from the Government of the Republic of Korea, the centre will promote responsible and inclusive AI adoption and help train about 3 million people in digital and AI-related skills by 2035.

ADB President Masato Kanda said that Energy and digital access will define the region's future.

"These two initiatives build the systems Asia and the Pacific need to grow, compete, and connect. By linking power grids and digital networks across borders, we can lower costs, expand opportunity, and bring reliable power and digital access to hundreds of millions of people."

OPEC+ agreed on ‌Sunday a modest oil output hike for June, an increase that will remain largely on paper as long as the Iran war continues to disrupt Gulf oil supplies through the Strait of Hormuz.

Seven OPEC+ countries will raise oil output targets by 188,000 barrels per day in June, the third consecutive ​monthly increase, OPEC+ said in a statement after an online meeting. The increase is the same as that agreed ​for May minus the share of the United Arab Emirates, which on May 1.

The ⁠move is designed to show the group is ready to raise supplies once the war stops and signals that OPEC+ is ​pressing on with a business-as-usual approach despite the departure of the UAE from OPEC+, OPEC+ sources and analysts said.

"OPEC+ is sending a ​two-layer message to the market: continuity despite the UAE's exit, and control despite limited physical impact," said Jorge Leon, an analyst at Rystad and former OPEC official.

"While output is increasing on paper, the real impact on physical supply remains very limited given the Strait of Hormuz constraints. This is ​less about adding barrels and more about signaling that OPEC+ still calls the shots."

Top OPEC+ producer Saudi Arabia's quota will rise ​to 10.291 million bpd in June under the agreement, far above actual production. The kingdom reported actual production of 7.76 million bpd to ‌OPEC in ⁠March.

The seven members who met on Sunday were Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia, and Oman. With the UAE leaving, OPEC+ includes 21 members including Iran. But in recent years only the seven nations plus the UAE have been involved in monthly production decisions.

HIKE REMAINS LARGELY SYMBOLIC UNTIL HORMUZ RE-OPENS

The Iran war, which began on February 28, and the resulting closure of the ​Hormuz strait have throttled exports from ​OPEC+ members Saudi Arabia, ⁠Iraq and Kuwait, as well as from the UAE. Before the conflict, these producers were the only countries in the group able to raise production.

Even when shipping through the Strait of Hormuz ​reopens, it will take several weeks if not months for flows to normalise, oil executives from ​the Gulf and ⁠global oil traders have said.

The supply disruption has propelled oil prices to a four-year high above $125 per barrel as analysts begin to predict widespread jet fuel shortages in one to two months and a spike in global inflation.

Crude oil output from all OPEC+ members ⁠averaged 35.06 ​million bpd in March, down 7.70 million bpd from February, OPEC said in ​a report last month, with Iraq and Saudi Arabia making the biggest cuts due to constrained exports.

The seven OPEC+ members will meet again on June 7, ​the statement said.

Sri Lanka raised fuel prices by nearly 4% today (3 May), further fuelling inflation, which more than doubled last month due to the Middle East war.

Since March, Sri Lanka has raised fuel prices by more than 35%, while gas and electricity rates have also increased by a similar amount.

The island has also rationed fuel following supply disruptions.

Today, the state-owned Ceylon Petroleum Corporation increased the price of kerosene -- used by agricultural machinery -- to 265 rupees ($0.85) a litre, up 10 rupees.

Petrol rose 12 rupees to 410 rupees ($1.32). Diesel was up 10 rupees to 392 rupees.

Higher energy prices pushed inflation to more than double, reaching 5.4% in April, according to official data.

Fuel and electricity tariffs drove up transport costs as well as food prices, the Department of Census and Statistics said.

The island has been slowly emerging from the 2022 economic meltdown, when it ran out of foreign exchange reserves to pay for essential imports such as food, fuel and medicines.

However, it was hit hard in November by a cyclone that killed at least 643 people and affected more than 10% of the island's 22 million population.

The storm caused an estimated $4.1 billion in direct physical damage to buildings and agriculture, according to the World Bank.

The country has been stabilising its fragile economy with the help of a $2.9 billion IMF bailout agreed in early 2023, but high energy prices have seriously challenged recovery efforts.

Japanese Prime Minister Sanae Takaichi vowed on Saturday to strengthen bilateral ties with Vietnam, with energy cooperation and critical minerals at the forefront, during a meeting with Vietnamese Prime Minister Le Minh Hung.

The pledge came as new Japanese investment in Vietnam fell about 75% year-on-year to $233 million in the first quarter, even as bilateral trade rose 12.3% to $13.7 billion over the same period, according to Vietnamese government and customs data.

The two leaders discussed ways to deepen the Comprehensive Strategic Partnership established in 2023, focusing on energy, critical minerals, artificial intelligence, semiconductors and space.

"The two sides identified economic security as a new priority area for bilateral cooperation," Takaichi told reporters after the meeting.

"With regard to critical minerals... both sides agreed to strengthen close coordination to ensure stable supplies and reinforce supply chains," she added.

In a joint move, Vietnam and Japan signed six agreements encompassing infrastructure, climate action, agriculture, technology, digitalisation and space cooperation.

Japan remains one of Vietnam's largest foreign investors, with many Japanese multinationals operating large manufacturing facilities in the country.

Vietnam has been seeking support from Japan and other countries for oil supplies as conflict in the Middle East drives prices higher and disrupts supply chains.

Under the $10 billion Power Asia Initiative to support Asian countries' energy self-reliance, Japan will assist in arranging crude oil supplies for Vietnam's Nghi Son Refinery and Petrochemical Complex, Hung said.

Takaichi was also set to meet Vietnam's Party Secretary and President To Lam on Saturday afternoon and deliver a keynote speech at Vietnam National University, marking a decade since former Prime Minister Shinzo Abe introduced Japan's "Free and Open Indo-Pacific" strategy.

Her address is expected to emphasise autonomy and resilience for regional nations.

Vietnam supports Japan's regional initiatives, including the Free and Open Indo-Pacific Vision, aligned with the ASEAN Outlook on the Indo-Pacific, in accordance with international law and "contributing positively to peace, stability, cooperation and development in the region and beyond," Hung said.

Russia's Deputy Prime Minister Alexander Novak said on Thursday that the OPEC+ group of leading oil producers would continue working together despite the departure of the United Arab Emirates, Russian news agencies reported.

According to the reports, Novak said he did not expect an oil price war to emerge following the UAE's exit given a global oil deficit.

The UAE said on Tuesday it was quitting OPEC, dealing a blow to the oil producers' group as an unprecedented energy crisis triggered by the Iran war exposes discord among Gulf nations.

The UAE was the fourth-largest producer in OPEC+, which comprises OPEC and its allies, while Russia is second, behind Saudi Arabia.

"In the current situation, it is hard to talk about a price war when there is a shortage in the market. What we are seeing instead is the deepest crisis in the industry," Novak was quoted as saying by Interfax news agency.

"Large volumes of oil are not reaching the market today, while demand significantly exceeds supply. This has created an imbalance due to serious logistical disruptions, including the situation in the Middle East," Novak said according to Interfax.

Novak also reiterated that Russia will remain in OPEC+, which was formed in 2016.