Shares dither, oil spikes as investors mull Iran risks
LONDON: World shares slipped on Monday and oil prices rose towards five-month highs before retracing gains as investors awaited possible retaliation from Iran following US attacks on its nuclear sites, with knock-on risks to global trade and inflation. Equities remained restrained, with the dollar getting a modest safe-haven bid and no sign of a rush to bonds.
Oil prices whipsawed, rising to their highest since January during Asia trading, then falling back to flat, and were last up over 1 percent. US futures pointed towards a muted open on Wall Street. S&P 500 futures ticked up 0.1 percent while Nasdaq futures steadied. 'If you can keep your head when all about you are losing theirs, maybe you don't understand the situation,' said Paul Jackson Invesco's global head of asset allocation research.
'Whether a lack of market reaction is naiveté, or a proper assessment of the situation, time will tell,' he said. European shares fell after midday with the pan-European STOXX 600 index down over 0.3 percent. Some market participants hoped Iran might back down, with its nuclear ambitions curtailed, or even that regime change might bring a less hostile government to power there. 'That said, any sign of Iranian retaliation or threat to the Strait of Hormuz could quickly shift sentiment and force markets to reprice geopolitical risk more aggressively,' said Charu Chanana, chief investment strategist at Saxo.
The Strait of Hormuz is only about 33 km wide at its narrowest point and around a quarter of global oil trade and 20 percent of liquefied natural gas supplies pass through it. Analysts at JPMorgan cautioned that past episodes of regime change in the region typically resulted in oil prices spiking by as much as 76 percent and averaging a 30 percent rise over time. Goldman Sachs warned prices could temporarily touch $110 a barrel should the critical waterway be closed for a month. For now, Brent and US crude were both up over 82 cents to $77.83 and 85 cents to $74.68 a barrel, respectively. Gold also rose 0.4 percent to $3,381 an ounce.
Resilience
World share markets, especially in Asia, struggled. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.9 percent, dragged down by shares in Taiwan which closed 1.42 percent lower, while Chinese blue chips closed higher 0.3 percent and Japan's Nikkei eased 0.1 percent. Japan's manufacturing activity data on Monday showed a return to growth in June after nearly a year of contraction, but demand conditions remain.
The main buyers of Iranian oil are Chinese private refiners, some of whom have recently been placed on the US Treasury sanctions list. There is little evidence, however, that this has impacted flows from Iran to China significantly. The dollar firmed 1.25 percent against the yen and was last at 147.885, at its highest since May 15, while the euro dipped 0.5 percent to $1.1466. The dollar index firmed marginally to 99.299. There was also no sign of a rush to the traditional safety of Treasuries, with 10-year yields rising about 2 basis points to 4.389 percent.
Markets are still pricing only a slim chance the Fed will cut rates at its next meeting on July 30, even after Fed Governor Christopher Waller broke ranks and argued for a July easing. Most other Fed members, including Chair Jerome Powell, have been more cautious on policy, leading markets to wager a cut is far more likely in September. At least 15 Fed officials are speaking this week, and Powell faces two days of questions from lawmakers, which will likely cover US tariffs and the attack on Iran's nuclear sites. Among the economic data due are figures on US core inflation and weekly jobless claims, along with early readings on June factory activity from across the globe. — Reuters
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Kuwait Times
3 hours ago
- Kuwait Times
China helpless as Mideast war craters regional leverage
BEIJING: China has been able to do little more than stand back and watch as war between its key partner Iran and Zionist entity 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 Zionist-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 Zionist entity 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 Zionist entity'. Analysts say Beijing's ties with Tehran are central to its efforts to ensure a regional counterbalance against both the United States and Zionist entity 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 Zionist entity. 'Beijing has sought to prevent a total unravelling of Iran's regional role,' Gering said, pointing to Chinese efforts to resurrect the nuclear deal. China has condemned recent US strikes on Iran and called for parties in the region, 'especially (Zionist entity)', 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 defenses 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 Zionist entity 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 Program, was skeptical 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.'— AFP
Arab Times
11 hours ago
- Arab Times
Oil prices crash as Iran blinks
NEW YORK, June 24, (AP): If oil prices are any measure, Iran just flinched. The price of oil tumbled Monday afternoon in an historical move as traders bet that Iran's decision to bomb a U.S. base in Qatar signaled it was not planning to do the one thing that could really hurt America: Shut down the flow of oil by attacking crude shipments. 'When the response comes and it is muted, oil drops,' said Tom Kloza, chief market strategist at consultancy Turner Mason & Co, calling the limited Iran response far short of what many traders feared. 'This rivals some of the historic selloffs.' There's still plenty Iran could do to push prices back up, and the markets could be getting it all wrong, But oil analysts say there are plenty of reasons fear has receded. Adding to the odds that prices will settle, President Donald Trump announced that Israel and Iran had agreed to a complete ceasefire, though the situation remained unclear. The price of West Texas Intermediate, the U.S. benchmark, fell 7.2% to $68.51 per barrel in regular trading on Monday after Iran announced a missile attack on Al Udeid Air Base in Qatar, which the U.S. military uses. Traders were relieved because Iran said it had matched the number of bombs dropped by the U.S. on Iranian nuclear sites this weekend, a possible sign of a desire to de-escalate the conflict. The price of oil fell further after Trump announced a 'complete and total ceasefire' to be phased in over 24 hours. Oil fell almost 4% to $65.84 a barrel early Tuesday, and is now below where it was before fighting between Iran and Israel began over a week ago, when a barrel of U.S. crude was just above $68. Markets were initially nervous Sunday as oil futures opened for trading. The price of Brent crude, the international standard, had jumped 4% as traders anxiously watched the Strait of Hormuz, a waterway on Iran's southern border that legislators in Tehran were demanding be closed in retaliation. That would have walloped the global economy because much of world's crude and liquified gas passes through it. Brent crude was trading at $68.06 per barrel, down 3.5%, early Tuesday. That's good news for Trump, who wants the Federal Reserve to stop worrying about inflation and start cutting interest rates. It's also good for motorists this summer if the trend holds. Drivers were already paying higher prices at the pump before the U.S. attack. The average price nationwide is $3.18 per gallon, according to GasBuddy surveys, about 10 cents more than two weeks ago. Some traders doubted Iran would try to close the Strait of Hormuz even before its limited attack Monday. Much of country's own crude passes through the waterway - 1.5 million barrels a day - and oil is a big revenue generator for the country that they would be loath to disrupt. 'It's a silly notion that the Iranians would look to do that,' said Kloza. 'I've been covering oil for 50 years and we've never seen the Strait of Hormuz compromised.' Asked about the prospect of a shutdown on NBC's 'Meet the Press' Sunday, Vice President J.D. Vance put it more simply: 'I think that would be suicidal.' At current oil prices, Tehran receives roughly $40 billion in revenue annually from oil transiting the same waters. That is a tenth of what the entire of country produces in goods and services. Andy Lipow, an Houston based oil analyst, says history suggests Iran won't disrupt its own flow of oil, but that countries, like people, don't always act in their economic interests. 'The question for the oil markets is, 'Is his time different?',' he said. 'You might have an emotional decision.' He notes also that Iran has other ways to push oil higher without completely closing off the waterway. Iran could jam navigational devices, slowing transit, or drop mines in the water, forcing the U.S. Navy to do more escorts. Or it could bomb a tanker, he said, sending the premiums that shippers need to pay insurers sky high. If traders are wrong and oil shoots back up, the impact could be widely felt. A surge in oil prices would come at a bad time. Trump insists that the inflation scare is largely over, but many economists think higher prices are still coming because the full impact of his tariffs are only now beginning to show up on everyday goods. Trump is clearly aware things could change fast. 'To The Department of Energy: DRILL, BABY, DRILL!!! And I mean NOW!!!' he wrote on Truth Social Monday, adding. 'EVERYONE, KEEP OIL PRICES DOWN. I'M WATCHING!'
Kuwait Times
11 hours ago
- Kuwait Times
Shares dither, oil spikes as investors mull Iran risks
LONDON: World shares slipped on Monday and oil prices rose towards five-month highs before retracing gains as investors awaited possible retaliation from Iran following US attacks on its nuclear sites, with knock-on risks to global trade and inflation. Equities remained restrained, with the dollar getting a modest safe-haven bid and no sign of a rush to bonds. Oil prices whipsawed, rising to their highest since January during Asia trading, then falling back to flat, and were last up over 1 percent. US futures pointed towards a muted open on Wall Street. S&P 500 futures ticked up 0.1 percent while Nasdaq futures steadied. 'If you can keep your head when all about you are losing theirs, maybe you don't understand the situation,' said Paul Jackson Invesco's global head of asset allocation research. 'Whether a lack of market reaction is naiveté, or a proper assessment of the situation, time will tell,' he said. European shares fell after midday with the pan-European STOXX 600 index down over 0.3 percent. Some market participants hoped Iran might back down, with its nuclear ambitions curtailed, or even that regime change might bring a less hostile government to power there. 'That said, any sign of Iranian retaliation or threat to the Strait of Hormuz could quickly shift sentiment and force markets to reprice geopolitical risk more aggressively,' said Charu Chanana, chief investment strategist at Saxo. The Strait of Hormuz is only about 33 km wide at its narrowest point and around a quarter of global oil trade and 20 percent of liquefied natural gas supplies pass through it. Analysts at JPMorgan cautioned that past episodes of regime change in the region typically resulted in oil prices spiking by as much as 76 percent and averaging a 30 percent rise over time. Goldman Sachs warned prices could temporarily touch $110 a barrel should the critical waterway be closed for a month. For now, Brent and US crude were both up over 82 cents to $77.83 and 85 cents to $74.68 a barrel, respectively. Gold also rose 0.4 percent to $3,381 an ounce. Resilience World share markets, especially in Asia, struggled. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.9 percent, dragged down by shares in Taiwan which closed 1.42 percent lower, while Chinese blue chips closed higher 0.3 percent and Japan's Nikkei eased 0.1 percent. Japan's manufacturing activity data on Monday showed a return to growth in June after nearly a year of contraction, but demand conditions remain. The main buyers of Iranian oil are Chinese private refiners, some of whom have recently been placed on the US Treasury sanctions list. There is little evidence, however, that this has impacted flows from Iran to China significantly. The dollar firmed 1.25 percent against the yen and was last at 147.885, at its highest since May 15, while the euro dipped 0.5 percent to $1.1466. The dollar index firmed marginally to 99.299. There was also no sign of a rush to the traditional safety of Treasuries, with 10-year yields rising about 2 basis points to 4.389 percent. Markets are still pricing only a slim chance the Fed will cut rates at its next meeting on July 30, even after Fed Governor Christopher Waller broke ranks and argued for a July easing. Most other Fed members, including Chair Jerome Powell, have been more cautious on policy, leading markets to wager a cut is far more likely in September. At least 15 Fed officials are speaking this week, and Powell faces two days of questions from lawmakers, which will likely cover US tariffs and the attack on Iran's nuclear sites. Among the economic data due are figures on US core inflation and weekly jobless claims, along with early readings on June factory activity from across the globe. — Reuters
