Oil prices stable as investors await Iranian response to US strikes
LONDON: Oil prices jumped on Monday to their highest since January as the United States' weekend move to join Israel in attacking Iran's nuclear facilities stoked supply concerns.
Brent crude futures were up just 8 cents to $77.09 a barrel as of 0904 GMT. US West Texas Intermediate crude rose by 3 cents to $73.87.
Price volatility continued in Monday's session. Both contracts touched fresh five-month highs earlier in the session of $81.40 and $78.40 respectively, before giving up their gains and even turning negative during the European morning session.
Brent has risen around 11% since the conflict began on June 13, while WTI has gained approximately 9%. Prices flattened out on Monday as investors weighed the geopolitical risk premium in oil markets without any impact on supply yet from the Middle Eastern crisis.
'The geopolitical risk premium is fading, as so far there has been no supply disruptions. But as it's unclear how the conflict might evolve, market participants are likely to maintain a risk premium for now.
So prices are set to stay volatile in the near term,' UBS analyst Giovanni Staunovo said. Prices rose at the open after US President Donald Trump said he had 'obliterated' Iran's main nuclear sites in strikes over the weekend, joining an Israeli assault in an escalation of conflict in the Middle East as Tehran vowed to defend itself.
Iran is OPEC's third-largest crude producer. Iran said on Monday that the US attack on its nuclear sites expanded the range of legitimate targets for its armed forces and called US President Donald Trump a 'gambler' for joining Israel's military campaign against the Islamic Republic.
Oil prices settle lower
The geopolitical risk premium includes fears that an Iranian retaliation may include a closure of the Strait of Hormuz, through which roughly a fifth of global crude supply flows.
'All eyes remain on the Strait of Hormuz … and whether Iran will seek to disrupt tanker traffic,' Saxo Bank analyst Ole Hansen said.
Prices could spike in the short term even without full-scale disruption, if the threat of interference alone is enough to delay shipments through the Strait, Hansen added.
Goldman Sachs said in a Sunday report that Brent could briefly peak at $110 per barrel if oil flows through the critical waterway were halved for a month, and remain down by 10% for the following 11 months.
The bank still assumed no significant disruption to oil and natural gas supply, citing global incentives to try to prevent a sustained and very large disruption.
Given the Strait of Hormuz is indispensable for Iran's own oil exports, which are a vital source of its national revenues, a sustained closure would inflict severe economic damage on Iran itself, making it a double-edged sword, said Sugandha Sachdeva, from research firm SS WealthStreet.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
27 minutes ago
- Business Recorder
Pakistan extends airspace ban on Indian aircraft for another month
Pakistan has extended its airspace restriction on Indian aircraft for another month, according to a fresh Notice to Airmen (NOTAM) issued by the Pakistan Airports Authority. The restriction applies to all aircraft registered in India, as well as those operated, owned, or leased by Indian airlines and operators, including military flights. The ban will remain in place until July 23 at 2359 GMT (0459 PKT next morning), the NOTAM said. Pakistan extends airspace closure for Indian flights by one month It covers both the Karachi and Lahore Flight Information Regions (FIRs), effectively blocking Indian flights from transiting through Pakistani airspace at all altitude levels. The airspace closure was first enforced on April 24, 2025, and has since been extended through successive advisories. The restriction impacts both commercial and non-commercial aviation activities and may be subject to further review depending on regional developments.
Business Recorder
an hour ago
- Business Recorder
Airlines disrupted by Middle East conflict
PARIS: Global airlines have suspended or reduced flights in the Middle East as the conflict between Israel and Iran rages and the United States joins the fight. The US carried out strikes against Iranian nuclear sites overnight Saturday to Sunday after over a week of deadly missile exchanges between Israel and Iran. Global airlines bypass ME Here is the latest airline situation: European airlines British Airways cancelled flights between London's Heathrow Airport and Dubai and Doha on Sunday following the US strikes on Iran. But the airline said Monday that it was 'scheduled to operate as normal' on those routes. Air France halted flights to Saudi Arabia and the United Arab Emirates until at least Tuesday inclusive, the airline said. It also extended the suspension of the Paris-Tel Aviv route until July 14. Flights of Air France's low-cost carrier Transavia from Paris to Beirut have been suspended until June 30 while the Tel Aviv route is closed until September 7. Germany's Lufthansa group, whose other airlines include Swiss, Austrian and ITA, has suspended flights to the Middle East until June 30. The Amman and Erbil, Iraq, routes were also suspended until July 11. The group will not fly to Tel Aviv and Tehran will until July 31 and is also avoiding the air space of countries involved in the conflict. Greece's Aegean Airlines has stopped Tel Aviv flights until July 12. Its Amman, Beirut and Erbil routes are closed until June 28. Turkish airline Pegasus has scrapped flights to Iraq, Jordan and Lebanon until June 30, and Iran until July 30. No Turkish Airlines flights to Baghdad, Damascus and Tehran are available before July 1. Finnair meanwhile confirmed it was suspending flights to Doha. The carrier is also staying out of the airspace of Iran, Iraq, Syria and Israel. US and Canadian airlines United Airlines has warned passengers that flights to and from Dubai scheduled between June 18 and July 3 may be affected and is offering no-fee ticket changes under certain conditions due to Middle East unrest. The US airline has implemented the same flexibility for Tel Aviv flights between June 13 and August 1, allowing customers to rebook for other major European cities. Air Canada has temporarily suspended its daily non-stop service from Toronto to Dubai starting June 18 and warned the suspension could be extended. Travel via a European stopover on a partner airline remains possible, according to its website. American Airlines is allowing customers to change their bookings to Doha without fees for travel originally scheduled between June 19 and July 20.
Business Recorder
an hour ago
- Business Recorder
Trump tells ‘everyone' to keep oil prices down
US President Donald Trump on Monday expressed a desire to see oil prices kept down amid fears that ongoing fighting in the Middle East could cause them to spike. 'Everyone, keep oil prices down, I'm watching! You're playing into the hands of the enemy, don't do it,' he wrote in all caps on his Truth Social platform. Oil prices stable as investors await Iranian response to US strikes Trump followed up with another post addressed to the US Department of Energy, encouraging it to 'drill, baby, drill' and saying 'I mean now.'
