Stock markets across Europe are also rallying.

Germany’s DAX index has hit a record high, up 0.7%. And that’s helped to lift the pan-European Stoxx 600 index up by 0.35% to a new intraday high too.

The drop in the oil price in the last few weeks has lowered the risk that eurozone interest rates are raised further later this year.

Britain’s blue-chip stock index has hit its highest level since the first week of the Iran war this morning.

The FTSE 100 climbed as high as 10,701 points this morning, up 0.4%, its highest level since 3 March.

Precious metals miner Fresnillo (+2.5%), engineering firm Weir Group (+2%), and energy company SSE (+1.8%) are the top risers.

Several factor are lifting the ‘Footsie’, including hopes of a US-Iran peace deal which have pushed the oil price down (and could send it lower…)

A weaker-than-expected US employment report, released yesterday, has also cheered traders by dampening expectations of rises in US interest rates.

Dan Coatsworth, head of markets at AJ Bell, explained:

“Weak jobs numbers would normally be a key reason for central banks to consider cutting rates to stimulate the economy.

The latest US jobs data confirms labour market disappointment but we’re nowhere near the stage where the Fed will reach for the monetary policy scissors to start cutting. We’re more likely to see an adjustment to the Fed’s assessment that implies no change to rates, which is still a win for markets.

Thirdly, investors are ‘rotating’ out of chip stocks (following a stellar start to the year) and into ‘old economy’ companies instead, and there are plenty of those on the London stock market.

Voyages through the Strait of Hormuz have more than quadrupled in the past week amid growing confidence in the US and Iran’s 60-day ceasefire, the Financial Times reports.

The number of traceable journeys by ships passing into and out of the Gulf each day has increased from between one and two for the majority of the conflict to eight on July 1, according to a moving seven-day average from maritime data platform Signal.

Also, the number of transits into and out of the Gulf including ‘dark voyages’ reached a total of 258 in the week to June 28, up from 41 in the first week of the crisis in March, according to data from Lloyd’s List Intelligence.

More here.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Hopes of peace in the Middle East have been pushing oil down in recent weeks, and there could be further falls to come!

Analysts at Citigroup have predicted that Brent oil could fall to $60 a barrel by the end of the year, a level last seen in January. Brent has already fallen from $126/barrel at the end of April to $72 this morning, wiping out its jump after the Iran war began.

As Citi’s Francesco Martoccia puts it:

“Fundamentals are rapidly reasserting themselves.

Shipping flows are normalizing, Chinese buyers remain absent, physical crude markets have weakened sharply, and inventories have drawn far less than expected.”

Crude price have fallen following the resumption of flows through the strait of Hormuz, as the US and Iran try to agree a peace deal.

On Wednesday the two sides held a round of indirect talks in Doha, discussing maritime traffic in the Strait of Hormuz and unfreezing Iran’s funds.

Those talks have now been paused, as Iran holds a funeral ceremony for Ali Khamenei’s, the supreme leader who was killed on the first day of the conflict.

There is still the risk that the conflict re-escalates (as we saw last weekend when a new round of escalating strikes between Iran and the US rocked the region).

James Hosie, equity analyst at Shore Capital, warned that oil could push higher if the talks stalled, telling clients:

The current US-Iran ceasefire remains fragile after an Iranian drone strike on a Panama-flagged oil tanker last week was followed by both sides targeting regional military sites. At this stage, the attacks do not appear to have materially disrupted vessel owners’ willingness to navigate the Strait.

A return of blockades could cause a spike in Brent back above $100 per barrel, although we would anticipate markets pricing in such disruption with the assumption that it is very temporary and becoming a catalyst for further ceasefire talks.

A breakdown in diplomacy leading to a resumption of daily missile strikes between the US or Israel and Iran could result in a return to higher oil prices for a more sustained period.

The agenda

• 9am BST: UN’s FAO Food Price Index

• 9am BST: Eurozone service PMI report for June

• 9.30am BST: UK service PMI report for June