Oil prices climb as Israel-Iran conflict heightens supply disruption fears
[TOKYO] Oil prices climbed in early Asian trade on Monday after Israel and Iran launched fresh attacks on Sunday, heightening fears that escalating battle could trigger a broader regional conflict and widely disrupt oil exports from the Middle East.
Brent crude futures were up US$1.70, or 2.3 per cent, to US$75.93 a barrel by 2253 GMT, while US West Texas Intermediate crude futures gained US$1.62, or 2.2 per cent, to US$74.60. They had surged more than US$4 earlier in the session.
Both benchmarks settled 7 per cent higher on Friday, having surged more than 13 per cent during the session to their highest levels since January.
The latest exchange of strikes between Israel and Iran resulted in civilian casualties and intensified fears of a broader regional conflict, with both militaries urging civilians on the opposing side to take precautions against further strikes.
The latest developments have stoked concerns about disruptions to the Strait of Hormuz, a vital shipping passage.
About a fifth of the world's total oil consumption passes through the strait, or some 18 to 19 million barrels per day (bpd) of oil, condensate and fuel.
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US President Donald Trump said on Sunday he hopes Israel and Iran can broker a ceasefire, but said sometimes countries have to fight it out first. Trump said the US will continue to support Israel but declined to say if he asked the US ally to pause its strikes on Iran.
German Chancellor Friedrich Merz said he hoped a meeting of the Group of Seven leaders convening in Canada on Sunday would reach an agreement to help resolve the conflict and keep it from escalating.
Meanwhile, Iran has told mediators Qatar and Oman that it is not open to negotiating a ceasefire while under Israeli attack, an official briefed on the communications told Reuters on Sunday, as the two foes launched fresh attacks and raised fears of a wider conflict.
Iran, a member of the Organization of the Petroleum Exporting Countries, currently produces around 3.3 million bpd, and exports more than 2 million bpd of oil and fuel.
The spare capacity of Opec and its allies, including Russia, to pump more oil to offset any disruption is roughly equivalent to Iran's output, according to analysts and Opec watchers. REUTERS
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Straits Times
2 hours ago
- Straits Times
Will Iran's energy grid, oil reserves be Israel's next targets in its bid for regime change?
An oil storage facility in Tehran burns after being hit by Israeli air strikes on June 15. PHOTO: ARASH KHAMOOSHI/NYTIMES News analysis Will Iran's energy grid, oil reserves be Israel's next targets in its bid for regime change? LONDON – A few days into the military confrontation, any assessment of the war between Israel and Iran is likely to be tentative. Yet, even in this early phase, three broad conclusions are emerging. Iran and Israel are throwing all their arsenals and military capabilities into a fight that both sides consider as crucial to their existence. As a result, the risk of the operation escalating into much broader destruction remains very real. And while the casualty toll is rising fast, both sides are keeping their eyes firmly fixed on the only diplomatic actor that matters in this case: the United States. So, although President Donald Trump continues to resort to meaningless slogans – 'Make the Middle East Great Again', as he put it in his latest public intervention on Truth Social, his favourite social media platform – what the US leader thinks or does remains crucial not only to Israel, but also to Iran. Israel's operation is vast. The first wave of attacks on Iran involved over 200 combat aircraft striking over a hundred targets, including not only nuclear installations, but also the homes of Iran's military leadership, ballistic missile production and storage sites, and air defences. The current Israeli daily operations are much smaller. Still, they regularly involve around 50 jets in each wave; in total, over 300 various Iranian targets have been hit in the first three days of fighting. Still, Israel is far from succeeding in eliminating Iran's nuclear programme, which remains the main objective of its operation. The Natanz nuclear complex sustained severe damage on the first day of strikes. Its above-ground fuel plant, which produced enriched uranium at 60 per cent levels usually required for nuclear weapons, has been destroyed, a fact confirmed by both the International Atomic Energy Agency – the UN nuclear watchdog – and by satellite photographs. However, Iran has two additional known fuel enrichment plants, including the largest one located at Natanz, which is underground. The entrances to these facilities have been struck by Israeli jets and Mossad security agents operating inside Iran. The electrical infrastructure supporting the Natanz site was also destroyed. The sudden loss of power and the vibrations caused by repeated explosions may have damaged the delicate centrifuges required for the enrichment process. But it will take a while for Israel to be certain of this outcome. And Iran's third enrichment facility at Fordow, which plays a critical role in its nuclear programme, is buried underground at depths of around 90 m. That facility can only be destroyed by the American GBU-57/B Massive Ordnance Penetrator, a precision-guided monster weighing 13,600 kg that can only be operated by US bombers. Israel may be able to destroy the access to this facility, but unless it renders Fordow inoperable, the chance remains that Iran would be able to produce enough weapons-grade uranium for roughly nine nuclear weapons using its current enriched uranium stockpile. Israel has now achieved complete air control over Iran; not only its jets, but also the various versions of its Heron drones now operating in Iran's skies with impunity. However, the snag for the Israeli government is that it is under pressure to widen its attacks beyond just the nuclear and military installations, to Iran's wider civilian infrastructure. When the war began, Israel warned the Iranians that if they retaliate by hitting at Israeli cities, they should expect the Iranian economy to be struck in return. The Iranians clearly got the message, but they also knew that they stood no chance of persuading Israel to stop its offensive unless they aimed their missiles at the Jewish state's main population centres. So, while Iran's official media was initially careful to claim that the retaliation against Israel was limited to military targets in the first few days of the war, that pretence was soon dropped. State-controlled TV is now broadcasting endless clips of Israeli cities under fire, to the accompaniment of marches popular from the Iran-Iraq war of the 1980s. Iran had 'opened gates of hell' on Israel, boasted the June 15 front page of Keyhan, an influential Iranian newspaper. 'We will end the war and Israel simultaneously,' it added. In reality, around 90 per cent of the approximately 500 missiles Iran fired at Israel since the start of the current confrontation were either successfully intercepted, or caused no damage. To date, 13 Israelis have been killed in these attacks and a further 400 have been wounded. By any normal yardstick, this is not a large number for a 9.7 million-strong nation. But for ordinary Israelis, previously accustomed to watching the interception of hostile missiles above their skies as almost a source of entertainment, the casualty tool is already regarded as intolerable. So the pressure is on the government to expand its strikes and destroy Iran's civilian infrastructure. Oil and natural gas wells, as well as Iran's energy export facilities to markets such as China – which go out of Kharg Island and the port of Bandar Abbas – are unlikely to be targeted by Israel at this stage, because this would provoke worldwide mayhem in energy markets and infuriate the US. But Iran's electricity grid as well as strategic oil reserves are sure to be destroyed in the days to come. Israeli Prime Minister Benjamin Netanyahu has long believed that Iran's nuclear quest can only be terminated through regime change – the removal of the country's current rulers. American sources have revealed that soon after the current fighting began, US President Donald Trump rejected a plan by Israel to kill Iran's Supreme Leader Ayatollah Ali Khamenei. However, Mr Netanyahu may now seek regime change through different means. The Iranian economy is already tottering, weakened by decades of sanctions and gross mismanagement. He may well calculate that if ordinary Iranians are deprived of electricity and fuel, they may well come into the streets and overthrow their current rulers. Asked in a US media interview on June 15 if regime change was part of Israel's military effort, Mr Netanyahu replied: 'That could certainly be the result because the Iranian regime is very weak.' Yet, the record of previous efforts to hasten the overthrow of a government indicates that nobody can predict what triggers revolutions, and their outcomes are seldom those intended. Besides, President Trump still believes that after a bout of fighting, the current Iranian regime will be persuaded to return to the negotiating table and agree to give up its nuclear aspirations. That is just about as unrealistic as Prime Minister Netanyahu's hope for regime change. Still, the fact that the US may be impatient to stop the war dominates the calculations of both Iran and Israel. Israel's current objective is to degrade Iran's military capabilities as much as possible in the shortest period, and perhaps goad Iran into attacking US installations throughout the Middle East, a step that will bring the US into the fray. Meanwhile, Iran's objective is to resist for as long as needed until President Trump starts putting pressure on Israel to stop. Mr Trump certainly relishes his pivotal role in this conflict. Even though none of what is happening now will ever 'Make the Middle East Great Again.' Jonathan Eyal is based in London and Brussels and writes on global political and security matters. Join ST's Telegram channel and get the latest breaking news delivered to you.
Business Times
2 hours ago
- Business Times
US pushes Vietnam to decouple from Chinese tech: sources
[HANOI] The United States is pushing Vietnam in tariff talks to reduce the use of Chinese tech in devices that are assembled in the country before being exported to America, three sources briefed on the matter said. Vietnam is home to large manufacturing operations of tech firms such as Apple and Samsung, which often rely on components made in China. Meta and Google also have contractors in Vietnam that produce goods such as virtual reality headsets and smartphones. The South-east Asian nation has been organising meetings with local businesses to boost the supply of Vietnamese parts, with firms showing willingness to cooperate but also warning they would need time and technology to do so, according to one source with knowledge of the discussions. The Trump administration has threatened Vietnam with crippling tariffs of 46 per cent which could significantly limit access for Vietnam-made goods to their main market and upend the Communist-run country's export-oriented growth model. Vietnam has been asked 'to reduce its dependency on Chinese high-tech', said one source familiar with the discussions. 'That is part of the restructuring of supply chains and would in turn reduce US dependency on Chinese components,' the source added. The ultimate objective is to speed up US decoupling from Chinese high-tech while increasing Vietnam's industrial capacity, a second source said, citing virtual reality devices as an example of Vietnam-assembled products that are too dependent on Chinese technology. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up All sources declined to be identified as the discussions were confidential. Reuters was not able to learn if the US has proposed numerical targets such as caps on Chinese content for 'Made in Vietnam' goods or different tariff rates based on the amount of Chinese content. Apple, Samsung, Meta and Google did not reply to Reuters requests for comment. As the US-imposed deadline of Jul 8 nears before the tariffs take effect, the timing and scope of a possible deal remain unclear. All sources stressed that while the US has made broader requests for Vietnam to reduce its reliance on China, tackling the issue of Chinese high-tech content in exports was a key priority. Last year, China exported around US$44 billion of tech such as electronics components, computers and phones to Vietnam, about 30 per cent of its total exports to the country. Vietnam shipped US$33 billion of tech goods to the United States or 28 per cent of the US-bound exports. Both flows are on the rise this year, according to Vietnam's customs data. Vietnam's trade ministry did not reply to Reuters requests for comment. Separate sources have previously said that US demands were seen as 'tough' and 'difficult' by Vietnamese negotiators. The US also wants Vietnam to crack down on the practice of shipping Chinese goods to America with misleading 'Made in Vietnam' labels that draw lower duties – which Vietnam is also trying to heed. The ministry said on Sunday (Jun 15)y that a third round of talks last week in Washington ended with progress, but critical issues remain unresolved. Vietnam's ruling Communist Party Chief To Lam intends to meet US President Donald Trump in the United States, possibly in late June, officials with knowledge of the matter said. No date has been announced for the trip. The White House and Vietnam's foreign ministry did not respond to requests for comment on the possible visit. Not too fast Local firms attending meetings organised by the trade ministry in recent weeks expressed a general willingness to adapt, but many warned that instant changes 'would destroy business', according to one of the sources. Vietnam has been slowly developing an industrial ecosystem with local suppliers but it has a long way to go before it can match China's advanced supply chains and cheaper pricing, industry executives say. 'Vietnam is about 15 to 20 years behind China in somewhat fully replicating its supply chain scale and sophistication, but it's catching up fast, especially in key sectors such as textiles and electronics,' said Carlo Chiandone, a Vietnam-based supply chain expert. Abrupt changes to existing practices may hurt Vietnam's delicate relationship with China, which is both a major investor in its South-east Asian neighbour and a source of security concerns. REUTERS
Straits Times
2 hours ago
- Straits Times
US pushes Vietnam to decouple from Chinese tech, sources say
Vietnam is home to large manufacturing operations of tech firms such as Apple and Samsung. PHOTO: AFP US pushes Vietnam to decouple from Chinese tech, sources say HANOI - The United States is pushing Vietnam in tariff talks to reduce the use of Chinese tech in devices that are assembled in the country before being exported to America, three people briefed on the matter said. Vietnam is home to large manufacturing operations of tech firms such as Apple and Samsung, which often rely on components made in China. Meta and Google also have contractors in Vietnam that produce goods such as virtual reality headsets and smartphones. The South-east Asian nation has been organising meetings with local businesses to boost the supply of Vietnamese parts, with firms showing willingness to cooperate but also warning they would need time and technology to do so, according to one person with knowledge of the discussions. The Trump administration has threatened Vietnam with crippling tariffs of 46 per cent which could significantly limit access for Vietnam-made goods to their main market and upend the Communist-run country's export-oriented growth model. Vietnam has been asked 'to reduce its dependency on Chinese high-tech,' said one person familiar with the discussions. 'That is part of the restructuring of supply chains and would in turn reduce US dependency on Chinese components,' the person added. The ultimate objective is to speed up US decoupling from Chinese high-tech while increasing Vietnam's industrial capacity, a second person said, citing virtual reality devices as an example of Vietnam-assembled products that are too dependent on Chinese technology. All sources declined to be identified as the discussions were confidential. Reuters was not able to learn if the US has proposed numerical targets such as caps on Chinese content for 'Made in Vietnam' goods or different tariff rates based on the amount of Chinese content. Apple, Samsung, Meta and Google did not reply to Reuters requests for comment. As the US-imposed deadline of July 8 nears before the tariffs take effect, the timing and scope of a possible deal remain unclear. All sources stressed that while the US has made broader requests for Vietnam to reduce its reliance on China, tackling the issue of Chinese high-tech content in exports was a key priority. In 2024, China exported around $44 billion of tech such as electronics components, computers and phones to Vietnam, about 30 per cent of its total exports to the country. Vietnam shipped $33 billion of tech goods to the US or 28 per cent of the US-bound exports. Both flows are on the rise in 2025, according to Vietnam's customs data. Vietnam's trade ministry did not reply to Reuters requests for comment. Separate sources have previously said that US demands were seen as 'tough' and 'difficult' by Vietnamese negotiators. The US also wants Vietnam to crack down on the practice of shipping Chinese goods to America with misleading 'Made in Vietnam' labels that draw lower duties - which Vietnam is also trying to heed. The ministry said on June 15 that a third round of talks last week in Washington ended with progress, but critical issues remain unresolved. Vietnam's ruling Communist Party chief To Lam intends to meet US President Donald Trump in the US, possibly in late June, officials with knowledge of the matter said. No date has been announced for the trip. The White House and Vietnam's foreign ministry did not respond to requests for comment on the possible visit. Not too fast Local firms attending meetings organised by the trade ministry in recent weeks expressed a general willingness to adapt, but many warned that instant changes 'would destroy business', according to one of the sources. Vietnam has been slowly developing an industrial ecosystem with local suppliers but it has a long way to go before it can match China's advanced supply chains and cheaper pricing, industry executives say. 'Vietnam is about 15 to 20 years behind China in somewhat fully replicating its supply chain scale and sophistication, but it's catching up fast, especially in key sectors like textiles and electronics,' said Mr Carlo Chiandone, a Vietnam-based supply chain expert. Abrupt changes to existing practices may hurt Vietnam's delicate relationship with China, which is both a major investor in its South-east Asian neighbour and a source of security concerns. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
