Oil stabilises after surge, stocks drop as Mideast crisis fuels jitters

Free Malaysia Today

6 hours ago

Markets in Hong Kong, Shanghai, Seoul, Singapore, Sydney, Wellington, Manila and Jakarta all sank. (AP pic)
HONG KONG : Oil prices stabilised today after surging the previous day on fears of a US intervention in the Israel-Iran conflict sparked by Donald Trump calling for Tehran's 'unconditional surrender'.
Iran and Israel exchanged missiles for a sixth day, with the US president's latest comments appearing to dent hopes that the crisis in the Middle East could be calmed.
Leaving the G7 summit in Canada a day early on Monday, Trump said he was aiming for a 'real end' to the conflict, not just a ceasefire.
He later shared a series of social media posts that stoked speculation he could be planning to join Israel in its strikes on Iranian military and nuclear sites.
Days after a senior US official said Trump had told Israel to back down from plans to assassinate top leader Ayatollah Ali Khamenei, the US president looked to reverse course.
'We know exactly where the so-called 'Supreme Leader' is hiding. He is an easy target, but is safe there – We are not going to take him out (kill!), at least not for now,' he wrote on his Truth Social platform.
Warning Iran against targeting US interests, he also posted: 'But we don't want missiles shot at civilians, or American soldiers. Our patience is wearing thin'.
And in a later post wrote: 'UNCONDITIONAL SURRENDER!'
The comments sent oil prices spiking more than 4% yesterday on fears an escalation of the conflict could hammer supplies from the crude-rich region.
However, while both main contracts dipped today, investors remain on edge over any negative developments.
Of particular concern is the possibility of Iran shutting off the Strait of Hormuz, through which around an estimated fifth of global oil supply traverses, according to the Commerzbank note.
'Iran is reportedly ready to target US regional bases should Trump greenlight strikes on Iranian nuclear facilities,' said Stephen Innes at SPI Asset Management.
'Washington's refuelling jets are already en route, and if Fordow gets hit, expect the Strait of Hormuz to become a maritime minefield, Houthi drones to swarm Red Sea shipping lanes, and every militia from Basra to Damascus to light up American forward outposts,' Innes said.
Markets in Hong Kong, Shanghai, Seoul, Singapore, Sydney, Wellington, Manila and Jakarta all sank, though Tokyo, Seoul and Taipei edged up.
The losses followed a weak day on Wall Street, where a below-forecast reading on US retail sales for May – dragged by a slowdown in auto sales – revived fresh worries about the world's top economy.
That came as another report showed factory output fell unexpectedly.
Still, they did provide a little hope the Federal Reserve (Fed) will eventually cut interest rates, with traders betting on two by the end of the year, according to Bloomberg News.
Investors will be keeping track of the bank's latest meeting as it concludes later in the day, with most observers predicting it will stand pat.
However, it is also due to release its rate and economic growth outlook for the rest of the year, which are expected to take account of the impact of Trump's tariff war.
'The Fed would no doubt be cutting again by now if not for the uncertainty regarding tariffs and a recent escalation of tensions in the Middle East,' said KPMG senior economist Benjamin Shoesmith.