Oil prices seesaw as investors await Iran response to US strikes
Oil prices wobbled and stock markets wavered Monday as traders awaited Tehran's response to US strikes on Iranian nuclear facilities over the weekend.
European stocks mostly retreated while Asian equities were mixed, with markets keeping a close eye on whether Iran will block the crucial Strait of Hormuz, which carries one-fifth of global oil output.
When trading opened on Monday, international benchmark crude contract Brent and US equivalent WTI both jumped more than four percent to hit their highest price since January.
They later dipped briefly into the red before recovering to trade slightly higher in midday trading.
"Will Iran choose to choke off the Strait of Hormuz or not? That is the big question," said Bjarne Schieldrop, chief commodities analyst at SEB bank.
But, "looking at the oil price this morning it is clear that the oil market doesn't assign a very high probability of it happening," he added.
Iran is the world's ninth-biggest oil-producing country, exporting just under half of the 3.3 million barrels it produces per day.
Tensions remained elevated as Iran and Israel intensified attacks on each other on the war's 11th day.
"The markets are not yet reacting with any degree of panic to the US airstrike on Iran's nuclear facilities as they await to see how Tehran responds," said AJ Bell investment director Russ Mould.
In Europe, Paris and Frankfurt stock markets both fell.
A closely watched survey showed Monday that eurozone business activity was almost stagnant again in June.
London's stock exchange was flat, with the rise in crude prices boosting shares in British energy majors BP and Shell.
But airlines, including EasyJet and British Airways-owner IAG, suffered losses on fears of rising energy costs and disruptions in travel to the Middle East.
In Asia, Tokyo was lower while Hong Kong and Shanghai gained.
"So far, satellite images reportedly suggest that oil continues to flow through the Strait, which may explain the muted market reaction to the news," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
She added that there is optimism that Iran will avoid full-blown retaliation "to prevent its own oil facilities from becoming targets and to avoid a widening conflict that could hurt China -- its biggest oil customer."
But "if things get uglier" the price of US crude could even spike beyond $100 per barrel, she said. Brent was trading at almost $78 per barrel on Monday while WTI was close to $75.
The dollar rose against other currencies but analysts questioned to what extent this would hold out.
- Key figures at around 1045 GMT -
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Tribune
8 hours ago
- Daily Tribune
Oil prices drop as Israel agrees to ceasefire proposal
Oil prices sank more than five percent Tuesday after Israel said it had agreed to US President Donald Trump's proposal for a bilateral ceasefire with Iran. Shares in Asia were buoyant, as fears of an energy market shock eased following 12 days of war between Israel and its arch-foe. London, Paris and Frankfurt also rose at the open. At around 0650 GMT on Tuesday, Brent was down 5.2 percent at $67.75 per barrel, while the main US crude contract WTI was 5.4 percent lower at $65.01 per barrel. "A potential end to the conflict has been welcomed by market participants," wrote Lee Hardman at MUFG, who noted that Brent "has now almost fully reversed all of the gains since the conflict started". "In the FX market a similar reversal is underway with the US dollar giving back recent gains. If Middle East risks now fade into the background as a market driver, it is more likely that the US dollar weakening trend will resume." Crude prices had briefly spiked Monday morning on the prospect that Iran could retaliate to a weekend US attack on its nuclear facilities by throttling oil transport through the strategic Strait of Hormuz. But they then tumbled as much as seven percent when Iran said it had launched missiles at a major US base in Qatar, with oilfield assets unaffected.
Daily Tribune
9 hours ago
- Daily Tribune
China helpless as Middle East war craters regional leverage: analysts
AFP | China has been able to do little more than stand back and watch as war between its key partner Iran and Israel harms its hard-fought leverage in the Middle East, analysts say. Beijing has sought to frame itself as a mediator in the region, facilitating a 2023 rapprochement between Saudi Arabia and Iran and portraying itself as a more neutral actor in the Israel-Palestinian conflict than its rival the United States. And its position as the largest purchaser of Iranian oil has served as a crucial lifeline for Tehran as its economy is battered by crippling international sanctions. But as Israel and Iran engaged in an unprecedented exchange of attacks and the United States struck key targets on Iranian soil in the past week, Beijing has offered little beyond calls for de-escalation. "Beijing has offered Tehran no real help -- just rhetoric that paints China as the principled alternative while it stays safely on the sidelines," Craig Singleton, senior China fellow at the Foundation for Defense of Democracies think tank, told AFP. China, he said, "sticks to rhetoric -- condemnations, UN statements, talk of 'dialogue' -- because over-promising and under-delivering would spotlight its power-projection limits". "The result is a conspicuously thin response that underscores how little real heft China brings to Iran when the shooting starts." - 'Strategic' friendship - China -- alongside its "no limits" partner Russia -- has long been a key backer of Iran, deepening ties in the wake of the United States' withdrawal from the Joint Comprehensive Plan of Action nuclear deal in 2018. President Xi Jinping described relations as "strategic" in a 2023 meeting with Iran's then-president Ebrahim Raisi, and backed Tehran in its fight against "bullying". Liu Qiang, a retired Chinese Senior Colonel, was even more explicit in an article on the academic website Aisixiang this month. "Iran's survival is a matter of China's national security," said the director of the Academic Committee of the Shanghai International Center for Strategic Studies. Beijing, he insisted, must take "proactive measures" in light of the recent war to ensure that Tehran "will not be broken by the military conflict" or "jointly strangled by the US and Israel". Analysts say Beijing's ties with Tehran are central to its efforts to ensure a regional counterbalance against both the United States and Israel as well as the Gulf States. "Iran fits into Beijing's broader campaign to counterbalance US-led hegemony and to a lesser extent NATO encroachment," Tuvia Gering, non-resident fellow at the Atlantic Council's Global China Hub, told AFP. Those efforts have gone into overdrive following blows to other "Axis of resistance" players since the start of the Gaza war -- the collapse of Bashar Al-Assad's rule in Syria and the degradation of Hamas and Hezbollah in fighting with Israel. "Beijing has sought to prevent a total unravelling of Iran's regional role," Gering said, pointing to Chinese efforts to resurrect the nuclear deal. - 'Little leverage' China has condemned recent US strikes on Iran and called for parties in the region, "especially Israel", to de-escalate. And it has called for a political solution to help a declared ceasefire hold. Fighting last month between India and Pakistan saw Beijing furnish its long-time allies in Islamabad with state-of-the-art military gear. Analysts don't expect China to extend the same courtesy to its comrades in Tehran, given the risk of direct confrontation with the United States. "Iran needs more than statements at the UN or missile components," Andrea Ghiselli, a lecturer at the University of Exeter, told AFP. "It needs air defences and fighter jets, which are things that China could provide but would require much time to be put into use -- not to mention the likely extremely negative reaction by Israel and, especially now that is directly involved, the US," he added. The United States has urged China to use its influence on Iran to help deter its leaders from shutting down the Strait of Hormuz, a vital route for oil and gas. But Ahmed Aboudouh, an associate fellow with the Chatham House Middle East and North Africa Programme, was sceptical that Beijing has the leverage. "China's position in the Middle East after this conflict" has been badly affected, he told AFP. "Everybody in the Middle East understands that China has little leverage, if any, to play any role in de-escalation."
Gulf Insider
13 hours ago
- Gulf Insider
Rabo: Even If Iran Does Not Close Hormuz
The world didn't have to wait long for Donald Trump to make up his mind over bombing Iran's nuclear facilities. Trump last week suggested that he would make a decision 'within the next two weeks', but that appears to have been a case of misdirection with a mission already in train to strike Fordo, Natanz and Esfahan. Seven B-2 Spirit bombers deployed from Missouri dropped fourteen 30,000lb bunker buster bombs (the world's most powerful non-nuclear weapons) on Fordo and Natanz, while a guided missile submarine hit the Esfahan facility with dozens of Tomahawk missiles. Trump, Hegseth and the Chairman of the Joint Chiefs have said that the strikes were an overwhelming success, 'obliterating' the Iran's nuclear program. Markets are, predictably, in risk-off mode this morning as traders contemplate what comes next, but given the gravity of the event the moves are perhaps surprisingly small. Brent crude rallied up as far as $81.40/bbl in early trade, but has fallen back below the $80/bbl level at time of writing. The Dollar is again burnishing its credentials as a safe-haven asset with the DXY index up 0.32% to 99.05, equity futures are pointing negative, Bitcoin is lower, sovereign curves are steepening and European gasoil futures are up a little more than 4.5% as markets again judge that Europe stands to be a loser on the energy front. Interestingly, spot gold has reversed earlier gains to be down $14/oz at time of writing following news that Iran has been liquidating reserves in a dash for liquidity. Keep an eye on the SOFR fix. Global Strategist Michael Every, writes 'While the U.S. may now prefer to reopen negotiations with Iran, the latter is in no mood to do so. Iran's parliament has voted to close the Strait of Hormuz in retaliation for the U.S. strike on its nuclear programme, with the final decision resting with their national security council. This would be unprecedented; economically ruinous for them; and for the world; almost impossible for them to do, as is; would ensure almost everyone who can would confront them to reopen the Strait; but… it's likely to see war insurance risk soar, and therefore push oil & LNG prices far higher. All the usual 'rational' market voices are saying Iran won't do it when they are a regime that in the past specialised in suicide bombings and are here threatening an economic suicide bomb. And as U.S. Secretary of State Rubio said: 'I would urge the Chinese government in Beijing to pick up the phone and talk to them. China relies heavily on oil that passes through the Strait of Hormuz. If Iran takes that step, it would be a serious mistake and a massive escalation,' who could last out a 30-day (for example) de facto closure of Hormuz better? Those with strategic reserves, like China, or those with much less, like Europe? Russia is also threatening 'some countries' could send Iran nuclear weapons. It's a short short-list, and Russia and Iran will meet today – will this be on the agenda? Again, it seems unlikely as it would be unprecedented and could potentially even take us to the edge of a new Cuban Missile Crisis – but fat tail risks are evident. So, how this all ends is still very much in the balance: regional peace — as Israel says 90% of Iran's enriched uranium was destroyed, it could stand down if Iran does, and the door has been opened to more Abraham Accords deals — or a wider war Ridiculously, ahead of this week's key NATO summit, Spain claims it's secured an opt-out from spending 5% of GDP on defence. How? Who else will claim the same because shifting spending priorities or borrowing or trading more 'is unreasonable'? And this is just as Spain is shown as vulnerable to a closure of Hormuz as anyone else – and yet won't be able to contribute much to either this or any future geopolitical crisis if it doesn't spend more. What will the political ramifications then be? This is also just after the FT ran an op-ed from an Eurocrat arguing Europe now has the chance to build itself in its own image thanks to Trump's hardball politics. Yes, all Europe has to do is build: a true single market; a capital market; a military; energy independence with no energy; its own tech firms; and globalise the Euro and get its own markets off the dollar – in a contested world where others would rather Europe fail than succeed; as The Telegraph talks of how the 'naive' U.K. government thinks its domestic levers of power still work, but don't, let alone the international ones.'' With so many moving parts and the sense of more shoes to drop in central Asia, it's likely to be a volatile week ahead. All eyes will be trained on the Middle East for signs of Iranian strikes on US regional bases, or any attempts to impede energy flows through Hormuz. Also read: Widespread GPS Jamming Across Strait Of Hormuz; Six Supertankers Perform Abrupt U-Turns
