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.
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First Post
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How China is scaling up Russian oil orders as Trump turns the screws on India
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How Trump targeted India over Russian oil By 2023, Russian crude accounted for more than one-third of India's oil imports, representing 36 per cent of the total market. United Nations trade data shows that in 2024, India imported $53 billion worth of petroleum and crude oils from Russia. In volume terms, this amounted to roughly 88 million tonnes during that year. However, in July, Trump announced that countries continuing to buy Russian crude would face the risk of secondary tariffs. According to the White House, the move was designed to increase economic pressure on Moscow and reduce its capacity to finance the war in Ukraine. This month the US imposed a further 25 per cent tariff on Indian goods shipped to the United States, on top of an existing 25 per cent levy, raising the total to 50 per cent. The Trump administration explicitly connected this penalty to India's imports of Russian oil and gas. STORY CONTINUES BELOW THIS AD As a result, Indian refiners have begun scaling back their purchases. Reuters citing analysts reported that New Delhi has reduced its Russian crude imports by between 600,000 and 700,000 barrels per day, a significant contraction. State-owned refineries in particular paused new orders as discounts narrowed, while private refiners also cut back amid fears of US reprisals. Senior figures in the Trump administration have been forthright about their position. US Treasury Secretary Scott Bessent told CNBC that India had moved from negligible levels of Russian oil imports before the war — less than 1 per cent of its supply — to sourcing around 42 percent from Russia. 'This is what I would call the Indian arbitrage – buying cheap Russian oil, reselling it as product,' he said, adding that Indian refiners had generated '$16 billion in excess profits – some of the richest families in India.' 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Bessent told CNBC that China had imported around 13 percent of its crude from Russia before the war, a figure that has since risen to 16 percent. 'So China has a diversified input of their oil,' he said. He argued that Beijing had not engaged in the same form of arbitrage that India had undertaken. How Russia is dependent on Asian markets Moscow has become heavily reliant on Asian customers in the wake of Western restrictions. Since 1979, when the US first imposed sanctions on Iran after the Tehran hostage crisis, oil markets have frequently been shaped by geopolitical disputes. For Russia, the fallout from the Ukraine conflict has forced a near-total reorientation of exports. European embargoes and G7 price caps have shut Russia out of its most lucrative markets. In their place, India and China have provided vital outlets. STORY CONTINUES BELOW THIS AD Together, the two countries absorbed the bulk of Moscow's seaborne exports in 2023 and 2024, helping stabilise its revenues even at discounted prices. China has made clear that it does not recognise US restrictions on global energy trade. Responding to questions by the Financial Times about its imports of sanctioned oil, the Ministry of Foreign Affairs in Beijing said the country has 'consistently opposed illegal unilateral sanctions' that lack approval from the United Nations Security Council. For the immediate future, China's refiners are taking advantage of discounted Russian barrels that India has relinquished. With inputs from agencies
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