Oil price falls as US delays decision on Iran
The price of oil reversed its sharp rally after the White House delayed a decision on American involvement in the Israel-Iran conflict.
On Thursday prices had jumped by almost 3 per cent and closed in on the $80 mark after Israel bombed nuclear targets, while Iran — one of the world's largest oil producers — fired missiles and drones at Israel.
Brent crude, the international benchmark price, fell by 3.3 per cent, or $2.63, to $76.2 a barrel on Friday, while West Texas Intermediate fell 0.07 per cent, or $0.05, to $75.09.
Iran has previously threatened to close the Strait of Hormuz to traffic in retaliation for western pressure, which could restrict global oil trade and supplies.
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Times
33 minutes ago
- Times
What war in the Middle East means for your money
The conflict between Israel and Iran is the latest geopolitical shock set to hamper the outlook for the UK economy — and, ultimately, your bank balance. Since the attacks began on June 12, the price of oil has risen to a six-month high. Hopes for interest rate cuts have been dashed, fears of rising inflation have been amplified, and any respite from stock market turmoil appears to have been short-lived. • Read more money advice and tips on investing from our experts This week the prime minister, Sir Keir Starmer, said: 'I'm always concerned about the effect of international issues on people back at home. You saw with Ukraine the direct impact it had on energy bills. Equally, with this conflict, you can see the effect it's having on the economy, particularly on the price of energy.' From petrol prices to pension pots, here's what you need to know: Iran is the third-largest oil producer among the 12 members of the Organisation of the Petroleum Exporting Countries (Opec), and there are worries about how a wider regional war could affect the transport of oil through the Strait of Hormuz, which accounts for about 25 per cent of seaborne crude oil transportation, according to the consultancy Capital Economics. The price of a barrel of Brent crude hit a six-month high of about $78 after Israeli attacks on Iran began, up from about $65 at the start of this month. That is bound to have a knock-on effect on motorists, said David Oxley from Capital Economics: 'A rough rule of thumb is that a $10 rise in the oil price will add about 7p to the price at the pump.' It normally takes about two weeks for oil prices to feed into pump prices, Oxley said. Motorists have, however, had some recent respite from the cost of living crisis as petrol and diesel prices hit their lowest in almost four years. Petrol cost an average of 132p a litre last month, the lowest since July 2021, while diesel was at 138p, the lowest since September 2021, according to the motoring organisation the RAC. While prices are likely to rise, they are not expected to reach the high of March 2022, when Russia's invasion of Ukraine caused the oil price to reach $127 per barrel. The price in sterling peaked in July of that year at more than £100 with pump prices hitting 192p per litre for petrol and 199p per litre for diesel. More than a million homeowners whose fixed deals come to an end this year may have their hopes of further interest rate cuts dashed. The lowest two-year fix was 3.72 per cent last month, but rates are starting to tick up again, according to the property portal Rightmove. The lowest two-year deal is now 3.82 per cent from Lloyds Bank for those with a Club Lloyds account. The lowest five-year fixed rate has gone from 3.78 per cent to 3.88 per cent, also from Lloyds. Lenders had been cutting mortgage rates to compete for business, but changed tack after inflation went from 2.6 per cent for the year to March to 3.5 per cent in April. This makes cuts to the Bank of England base rate less likely — the Bank generally keeps the rate high when inflation is above its target of 2 per cent. The Consumer Prices Index inflation figure for the year to May, released this week, was 3.4 per cent. Uncertainty around President Trump's trade tariffs and conflict in the Middle East has also dampened hopes of further base rate cuts. The Bank held rates at 4.25 per cent this week, which, although a lot higher than the sub 2 per cent rates many mortgage holders will have fixed at three or five years ago, is down from the peak of 5.25 per cent in August last year. Fixed mortgage rates are based on swap rates (the rates at which banks lend to each other, which are in turn based on forecasts of where Bank rate is expected to be in the future), which have edged up over the past week or so, suggesting that mortgage rates could follow. Homeowners who want certainty can lock in a new deal up to six months before theirs ends yet still swap if a cheaper deal comes along. Rising oil prices could also cause other expenses to creep up, particularly if the Iran conflict continues or escalates. Lotanna Emediegwu, an economics lecturer at Manchester Metropolitan University, said that prolonged conflict could drive up energy bills. The price cap that limits how much suppliers can charge customers on standard variable tariffs will work out at an average bill of £1,720 a year for gas and electricity from July 1 (down 7 per cent from today's cap). At the moment analysts expect the cap to go up 2 to 3 per cent in October, but this could change dramatically. He said: 'Until recently, fuel prices had been rising less than other things, so actually mitigating some inflationary pressures. The recent conflict is expected to reverse this trend. 'The financial repercussions extend beyond immediate energy costs into transportation and logistics. Transport expenses are particularly vulnerable to fluctuations in fuel prices. This affects everything from airline fares to shipping costs for products, ultimately hitting consumer prices.' Before June 12, when Israel launched strikes on Iran, inflation had been expected to rise to 3.5 per cent by the autumn — now it could go further. A sustained $10 per barrel rise in the oil price typically pushes up annual inflation by 0.1 to 0.2 percentage points, according to The Economist, meaning that it could be closer to 3.7 per cent by September. Emediegwu said a prolonged blockade of the Strait of Hormuz shipping route could add a further 0.5 to 1 percentage points, which could take it close to 5 per cent. So far the stock market has been fairly resilient to the conflict in the Middle East. The UK's FTSE 100 is down about 0.77 per cent since the turmoil started, while the US's S&P 500 is down about 1.06 per cent. If a sustained conflict leads to an increase in the price of oil, stock valuations may fall — this is because higher oil prices lead to higher inflation, which means interest rates are likely to stay higher for longer, which makes it more expensive for companies to borrow money to grow and often curbs investors' risk appetite. Losers are likely to include airline and travel stocks, as well as so-called growth stocks, which include technology and healthcare companies. Many investors will have exposure to the US 'Magnificent Seven' tech stocks of Microsoft, Apple, Alphabet, Tesla, Amazon, Meta and Nvidia. These companies are often valued on their future earnings potential, which means their stock price can be volatile if company results or wider economic conditions point towards a slowdown of earnings. The good news is that Iran and Israel are a very limited part of the global stock market, so direct exposure for most UK investors will be immaterial. However, Michael Field from the research firm Morningstar said that the risk is that wider markets get jittery about the potential for the conflict to escalate further. Investors should avoid making any kneejerk changes to their portfolio. Ultimately, while geopolitical tensions may create short-term turmoil, historically markets have been resilient in the long term. Jacob Falkencrone from the investment bank Saxo said: 'As an investor, your greatest tool is a disciplined approach — staying informed, remaining calm and focusing on your long-term investment goals rather than reacting impulsively to temporary shocks.'
BBC News
2 hours ago
- BBC News
Iran will consider diplomacy when Israeli aggression stops
Iran has said it will not resume talks over its nuclear programme while under attack, hours after Israel's defence minister warned of "prolonged" conflict against the Islamic of violence continued on Friday, as Iran fired another salvo of missiles at northern Israel, and Israel targeted dozens of sites in Iran. Israel's foreign minister, Eyal Zamir, said in a video address that his country should be ready for "ready for a prolonged campaign" and warned of "difficult days ahead."Iran's foreign minister Abbas Araghchi met with European diplomats in Geneva who urged him to revive diplomatic efforts with the US over Tehran's nuclear programme. But Araghchi said Iran was ready to consider diplomacy only once Israel's "aggression is stopped".He went on to say that Iran's nuclear programme was peaceful, and that Israel's attacks on it are a violation of international law, adding that Iran will continue to "exercise its legitimate right of self-defence"."I make it crystal clear that Iran's defence capabilities are non-negotiable," he said. Israel's ambassador to the UN accused Iran of having a "genocidal agenda" and posed an ongoing threat, adding that Israel would not stop targeting nuclear facilities until they were "dismantled". Trump: Iran doesn't want to speak to Europe Meanwhile, US President Donald Trump said on Friday that Iran had a "maximum" of two weeks to avoid possible US air strikes, suggesting that he could take a decision before the 14-day deadline he set on Thursday."I'm giving them a period of time, and I would say two weeks would be the maximum," Trump told added that the aim was to "see whether or not people come to their senses."The US president was also dismissive of the talks between Araghchi and foreign ministers from Britain, France, Germany and the EU."Iran doesn't want to speak to Europe. They want to speak to us. Europe is not going to be able to help in this," Trump said. UK Foreign Minister David Lammy said that the US had provided "a short window of time" to resolve the crisis in the Middle East, which he said was "perilous and deadly serious". French Foreign Minister Jean-Noel Barrot said "we invited the Iranian minister to consider negotiations with all sides, including the United States, without awaiting the cessation of strikes, which we also hope for".Barrot added that "can be no definitive solution through military means to the Iran nuclear problem" and warned that it was "dangerous to want to impose a regime change" in Iran. As the Geneva talks took place, the exchange of fire between Israel and Iran was hit by a new round of Iranian strikes with the Israeli military reporting an attack of 20 missiles targeting Israeli woman died of a heart attack, bringing the Israeli total since the conflict began to Israel Defense Forces said it attacked ballistic missile storage and launch sites in western the last week, Israeli air strikes have destroyed Iranian military facilities and weapons, and killed senior military commanders and nuclear health ministry said on Sunday that at least 224 people had been killed, but a human rights group put the unofficial death toll at 639 on has launched hundreds of ballistic missiles at Israel in response to the air strikes.
Telegraph
2 hours ago
- Telegraph
‘She's wrong': Trump throws Tulsi Gabbard under the bus on Iran
Donald Trump has said that Tulsi Gabbard and the US intelligence community is 'wrong' about Iran's nuclear capabilities. The US president doubled down on his claim that his own government officials are mistaken about how close Iran is to building a nuclear bomb when challenged by a reporter on Friday. 'What intelligence do you have that Iran is building a nuclear weapon?', Mr Trump was asked outside Air Force One. 'Your intelligence community have said they have no evidence that they are at this point.' 'Well then my intelligence community is wrong,' Mr Trump responded, before asking: 'who in my intelligence community said that?' 'Your director of national intelligence Tulsi Gabbard,' the reporter replies, before the president retorts: 'She's wrong.' Mr Trump added: 'Within a matter of weeks, or certainly within a matter of months, they're going to be able to have a nuclear weapon. We can't let that happen.' In March, Ms Gabbard told Congress the intelligence community 'continues to assess that Iran is not building a nuclear weapon and Supreme Leader Khamenei has not authorised the nuclear weapons program he suspended in 2003.' She also said the US was closely monitoring Iran's nuclear program, noting that the country's 'enriched uranium stockpile is at its highest levels and is unprecedented for a state without nuclear weapons.' Its the second time Mr Trump has directly contradicted Ms Gabbard on the issue, with the US president saying on Thursday that he did not 'care what she thinks'. Speaking aboard Air Force One on his return from the G7 summit in Canada, Mr Trump told reporters: 'I think they were very close to having a weapon.' Ms Gabbard later told CNN that her comments had been taken out of context and that she was on 'the same page' as Mr Trump. General Erik Kurilla, who leads US forces in the Middle East, recently testified to Congress that Iran could produce enough nuclear material for 10 weapons in three weeks. However, he did not say how long it would take to assemble the pieces into a bomb. On Thursday, Mr Trump's press secretary said Iran could produce a nuclear bomb 'within weeks'. 'Let's be very clear, Iran has all that it needs to achieve a nuclear weapon,' she said. 'All they need is a decision from the Supreme Leader to do that, and it would take a couple of weeks to complete the production of that weapon, which would of course pose an existential threat not just to Israel, but to the United States and to the entire world.' A senior intelligence official said Mr Trump was right to be concerned because its uranium enrichment far exceeds what would be needed for domestic purposes. Another senior administration official said Iran was as close to having a nuclear weapon as it could be without having one. Both spoke on condition of anonymity to discuss sensitive issues. Mr Trump's contradiction of Ms Gabbard echoed his feuds with US spy leaders during his first term, when he viewed them as part of a 'deep state' that was undermining his agenda. Most notably, he sided with Vladimir Putin in 2018 when asked if Moscow had interfered in the 2016 election, saying Mr Putin was 'extremely strong and powerful in his denial.'
